I'm iffy on the facial recognition accuracy. At times it is amazing. And then you identify a photo as belonging to a person and it goes nuts incorrectly identifying everyone as that person. It's good. Say 90% hit rate. But not great. I'm also confused that at times it seems to untag people (or rather retag them as being other people). I also will note that it is better then 90% with adults young and old, but much worse than that with infants and toddlers. Unfortunately, I have thousands of pictures of infants and toddlers.
I'll be interested to see how this information is stored. I have a feeling that Jason is correct. Picasa rarely modifies any original photos, so it is likely tucked away in the picasa.ini file rather than in the embedded meta data. Should be easy to create a utility to migrate the tags to the meta data, though. Is there a standard meta tag for this?