I'm just not moved by any of this. They fully disclose that they will not return your negatives. So don't use them! If they informed you after the fact, yes, that would be bad. But they don't. In fact, it sounds like they're very upfront about it.
Target and Costco still process 35mm and do return the negatives. And they're priced comparably.
This throwaway service strikes me as one for casual shooters who use disposable cameras or have never "upgraded" to digital. They're just as happy to receive digital prints and/or files.
I don't like the idea of negatives going in the garbage either. But they're not my negatives, and they don't have to be yours.