Reddit's had this feature forever, I don't understand why people have a problem with diggs version.
Reddit's bar is not on by default. Digg's is. This is a big difference. Having the frame and not simply redirecting means I can't see exactly what the pages URL is, it makes bookmarking, sorting and tagging that much harder. And site-specific scripts break.
The point is, it doesn't do anything to help enhance my browsing session. Being able to read comments on Digg is not a plus as far as I'm concerned. Being able to give a company that makes a website I don't use (or particularly like) my browsing habits is not something I have a huge desire to do. Besides, it doesn't put comments directly on the page. I still have to click through to Digg to read them.
Oh, and http://skitch.com/zadr/bms2t/not-useful <-- Seems to keep happening. Very difficult to read content if I want to do any scrolling at all.
People use all sorts of URL shorteners, if I want to see the content they're talking about, my choices are either to click or ask them to shorten it again. And the latter usually interrupts the flow of conversation.
Yes, it makes sense from Digg's perspective as a business. But from my perspective as a user, it sucks and I have a severe dislike for it.