I doubt this would kill the Surface, but it doesn't help either. There are other benefits to the Surface other than "Office". It's Microsoft's fault for running TV ads with consistent messages on Office which (to me) isn't the biggest selling point of the Surface tablets.
Does it state anywhere that you have to purchase another Office license for use on the iPad, and if so how much? That's a drawback for an iPad if you had to, because it's included with the Surface (RT/2).
People always like to talk about how the ipad has more apps. Apps really aren't that important on a tablet, at least not to me. Apps are great for phones where you have a small screen, but with the Surface, you have a large screen that is great for web browsing meaning that you don't really need apps. The only app I even use on my Surface now is Pulse(which I could definitely use a web browser to accomplish the same thing), for everything else I use Office or Internet Explorer.
Hopefully they'll become a little more comfortable playing with themselves -- launching Office on the iOS platform prior to Modern Apps is going to land them at the wanna-be-popular school cafeteria table after recess is over ;-)...Microsoft is demonstrating an ability to play nice with the other kids in the playground...