http://www.washingtonpost.com/wp-dyn/content/article/2008/10/29/AR2008102904105.html Oddly enough, I saw this on slashdot, rather than Bruce Schneier's blog or Daily Kos.
I'm totally thrilled. Optic-scan paper ballots are the absolute right solution for this problem. There's an audit trail. You can do fast tabulation. Spoiled ballots are detected while the voter is still there. It's cheaper than touch-screen machines. It keeps the election day lines shorter.
The only thing I'm bummed about is that they're still using touch screens next week. Ah well.