I have re-installed my XP at least 3 times since I've built my machine about 3 yrs ago (plus several h/w upgrades over that time).
It's just a bad biz model to limit the number of times you can re-install a product. Unless they are trying to say that Vista will run so "clean" that you won't have to do more than 3 re-installs in the lifetime of your machine.
Or perhaps they are saying that by the time most people reach 3 re-installs, MS will have another new OS already.
-Dex