I think it's an excellent development; to the best of my knowledge, I don't think RE has "interlined" in the past, which means that passengers to/from domestic markets had to pick up bags/check in again at DUB - hardly a pleasant prospect. This should make the whole experience better and make regional destinations more attractive for US travellers.
I would expect to see this being expanded; there's quite a few regional UK routes (Jersey being one) which are not quite big enough to handle A320s on anything more than a seasonal or (max) once daily service; RE could operate these, feed into EI long haul and release A320s for longer routes.
Together with the JetBlue deal, whenever that comes to fruition, presumably EI pax could check all the way through from (say) TPA-JFK-DUB-GWY/vice versa?