We've tried it out and it's quite a neat idea. An eBook appears in the hangout with pictures and text. Different parties in the Hangout call can be assigned to read for the various characters in the story. When their character appears the camera is used to show the reader onscreen but wearing the mask of the character. The image appears on the page of the book so it's integrated into the story.
At the moment there's only one story, The Three Billy Goats Gruff. It's a classic and lends itself well to the format - lots of silly voices, moving around with your mask on and showing your claws! My kids thought it was very funny.
If I had to travel for work and be away from my kids then this would be a lovely way to connect with them. Though probably not directly before bed because all the silliness wasn't a good way to calm down before sleep!
And it's a great way for grandparents to read a story to their grandchildren. You could even have multiple grandkids from different families joining the hangout to share a story.
I think it's also got potential as a way of encouraging kids to read the stories. Lots of kids will find it fun to see themselves on the screen wearing a character mask as they read. At school kids are encouraged to read with lots of expression and this is a great format for practising with or without an audience - you don't have to have other members in the hangout and a single person can take on all the parts.
Try it out: Storytime Hangout via Guardian
This isn't the first Google+ app for reading stories to children. There's also A Story Before Bed which is a subscription service which supports recording from a library of story books and has a Hangout app too.