The new 8GB Nook Tablet doesn't have this problem, but the older larger one does. So does the Nook Color.
In fact, that's why B&N has been offering this service for the Nook Color since at least September, I'm told.
Update: 2 readers are disputing whether this service can offer more user accessible space on the Nook Color. They say that it only works the other way. I don't have one to test, so I cannot comment.
But this is the first concrete proof that the Nook Tablet would get the same attention. I had gotten a hint here or there that this was coming, though.
I wonder what the statistics are for this service? My guess is that not many will make use of it. MicroSD cards are not that expensive, so I bet most people would simply get a card if they wanted more space. But as for me, I would want to recover the space squandered on B&N content that I will probably never buy.
Most of my library is stuff I bought before stripping the DRM; even what little I bought from B&N is already post-DRM. And yes, I do have multi-GB librries of content; my PDF collection lone is scary large (I never throw things away).