Well yeah, of course it looks similar. All of these devices are made in either the same factories, or darned near each other. They're probably swimming with like, similar or the same hardware in each of them. I don't think Apple has a problem with this knock off per say... Due to the fact that there are many differences between the final products as well as the fact that they cater to different audiences.
For one, the iPed has a plastic body, not aluminum. It also has a slower Intel processor, which likely is better I guess, since there's no aluminum to draw the heat away from the logic board etc..
However, if Google can get the Android OS to perform admirably on a slower processor, then that point is moot. It also has advantages (obviously) over the iPad in that it has an USB port and can recognize mass storage devices etc.. Running Android also provides freedom to the user, which you'll never see on an iPad.
But another 'however', is that everything sort of boils down to how useful the apps are ! These devices lifespans and popularity hinges on how well put together the apps are, as well as how they are presented or updated in the app store they reside in.
The iPed's UI may be a bit more sluggish, but if you put these things head to head with all things being equal in terms of apps and the app stores, then the iPed would almost certainly be the better device. The only other things to take into consideration are battery life, and customer service. And that last bit is where the iPed will undoubtedly fail. Plus... does the iPed offer 3g ? For the price though, I'd almost be willing to try it out.
Doug