In the overview of his proposal released on his homepage, Obama writes:

People who care deeply about issues in Washington but live outside the beltway rarely have the opportunity to question and interact with  government agencies. Messages are filtered through the media, and many times the hard questions are not asked. Barack Obama will bring democracy and policy directly to the  people by requiring his Cabinet officials to have periodic national broadband town hall meetings to discuss issues before their agencies.  The Internet makes it possible to take  our leaders directly to the people.  If this is possible then it should also be mandatory.

What Obama is proposing is not merely to open up the government to public scrutiny but to offer the chance for people to question and interact with their government in a more direct way than was hitherto possible.  Broadband townhall meetings would offer the opportunity for Americans to get to know what their government is doing --- but also to give feedback, to pose questions, and, most importantly, to pose challenges.
We see this nowhere more clearly than in Obama's proposal for regulatory hearings:

Every day, government agencies make decisions that impact the lives of Americans. These decisions require  public deliberation and input.  But at many agencies, these deliberations are conducted  out of the public view.  For example, several agencies, including the Securities &  Exchange Commission and the Federal Communications Commission, hold public  meetings only one or two days a month.  On all the other days, the commissioners and  staff members host lobbyists and lawyers in private meetings, and operate outside of the  public eye.  In these private meetings, companies can make their case for the regulation  that they want.  Average citizens cannot participate in this process, and consumer groups  just do not have the resources to offset the waves of corporate lobbyists that constantly  walk the halls of these agencies.
Barack Obama will require his appointees who lead the Executive Branch departments  and rulemaking agencies to conduct the significant business of the agency in public, so  that any citizen can see in person or watch on the Internet as the agencies debate and  deliberate the issues that affect American society.  Videos of meetings will be archived  on the web, and the transcript will be available to the public.  Obama will also require his nominees to commit to employ all the technological tools available to allow average citizens not just to observe, but to participate and be heard on the issues that affect their daily lives.

The idea is not just to archive video and post transcripts.  The internet isn't just a new way of disseminating information more broadly, it's about making public forums actually public.  Broadly speaking, he sees the internet as having the potential to change government: to shift decisions away from backroom deals with lobbyists and towards more open discussion.  Is this starry-eyed and unrealistic?  Well, yes, but if you're serious about making government work better, then it's imperative to do everything we can to move towards a goal of making government more responsive.  The more public input, the more sunshine, the better, and the more engaged a citizenry, the more willing they become to vote and to engage politically in their communities.
This philosophy is revealed most clearly in the final sentence:  "Obama will also require his nominees to commit to employ all the technological tools available to allow average citizens not just to observe, but to participate and be heard on the issues that affect their daily lives."
These proposals are a start.  There is a lot of room for more ideas.  It should further be a principle that every cabinet member should have a blog, with a comments section or some forum for public input.  And agencies should no doubt do a better job presenting themselves to the public and opening themselves up to public comment.  These public comments and questions can also have some sort of sorting mechanism, where visitors to the website can "recommend" or star the concerns they feel are most pressing to the top.  Other ways need to be thought up to make such a system more wieldy and manageable.
Another reason that this is just a start is that vast portions of our country still lack fundamental access.  Obama needs to commit to an agenda of providing nationwide affordable high-speed internet and to declaring the internet a public good.  Techpresident.com has already formulated a series of proposals that all of the Democratic candidates should sign on to.  They make a good argument for what this should all be about:

We are more connected than ever before and have more access to more information and more tools for identifying and solving problems than any generation in American history, thanks to the Internet.

As we prepare to pick the next President, we’d like to challenge all the candidates running to tell America: How should this public resource be used to make our country more competitive, more democratic, healthier, better educated, more secure and financially sound?

The Internet provides us as a country and as individuals with unparalleled powers to turn information into ideas and ideas into action. It links us to each other, and to our neighbors here as well as around the world, enabling us to organize to solve problems, transform our economy, help foster security, better deliver public services, and build our democracy.

Cross-posted on my.barackobama.com:
http://my.barackobama.com/page/community /blog/bitbybit