It acts as a keylogger on some android phones, when Carrier IQ is put into a "debug state". The researcher apparently triggered that by accident without knowing. It's not the default log level. Carrier IQ is likely benign and this whole issue seems to be bad tech journalism and sensationalism.
Do you really think this is logical, or even probable, based on the FBI's past history with abusing "National Security Letters" and other forms of snooping? Note that FBI has a long-term problem with wanting to collect info on legitmate dissenters: http://en.wikipedia.org/wiki/COINTELPRO
