Closing access to the Honeycomb source code as a step to avoid further fragmentation of the phone versions, and prevent unauthorized hacking and development, it's probably not a great idea. It's the open platform that attracts developers and ROM modders, and sometimes they come with solutions that will take Google the next version to roll out, or fix annoying little bugs.
Still, Google knows what will happen when it releases the source code, there will be a rush to port Honeycomb over to phones. and the whole interface and menus are made with tablet screens in mind. But so what? If you don't like it, you can always try it out just out of curiosity, and then revert back. Moreover, Android 2.4 will have some of the Honeycomb features, just with more phone-specific interface anyway, so that's what people will want in the end, and manufacturers give to them.
If this is actually the first step in a trial to avoid the fragmentation of Android for tablets, we are all for that, but that means the slate software development will come mostly from Mountain View, and some nice modding potential out there will be left untapped. We'll see where the future takes us. Andy Rubin was quoted to say "Android is an open-source project. We have not changed our strategy.", but it might turn out that in order to create quality experience you have to be at least somewhat closed, and that's what Google might be doing here.
source: Bloomberg via AppleInsider