It seems like it is about time Vimeo did this although right now there is no indication that they actually have. The RRW story doesn't link to anything that has the announcement from them and there is nothing on the Vimeo site about it either.
Why is it "about time"? You make it sound like Vimeo is years behind the pack, but in fact---if my understanding is correct---they are at the front, at least in regards to other big video hosting such as Youtube.
I agree they aren't that far behind but it is frustrating that they have taken a while to do it. The reason I say frustrating is because I use Google reader on an iPhone/iPad and if the feed includes a Youtube video it gets pulled in as html5. Youtube has had support for html5 video for a while now. Hopefully this change by Vimeo will be reflected in Google reader now as well.
I haven't used Google Reader on an iPad/iPhone but I think it's unlikely YouTube is using HTML5 there. Mobile Safari actually has a built in parser for YouTube embed code, so nearly any YT embed will work even thought it's clearly an <embed> tag right to a SWF. Normally Mobile Safari will completely ignore *.swf URLs.
So in some sense we're just now getting feature parity, in another we're ahead.
I believe that just says they are letting video and audio tags through. When those are in the feed the ipad can play the video inline in reader. A little testing seems to show that they are also letting their iframe embed through as well and when you use that you do get the html5 version of the player on the ipad and iphone. It looks like the Vimeo iframe embed isn't allowed to pass though but hopefully they will allow it. I put together a demo feed that shows the difference if anyone is interested:
http://serveany.s3.amazonaws.com/soclose.atom
Youtube has a custom player built into the iPhone/Pad - it's not standard HTML5 afaik, though they are experimenting with HTML5 embeds (see my comment above for link to the GOOG blog w/ deets).