I like your idea of the RFID and triangulation, but that is over my head as well and your winking eye leaves me to wonder how much is still theory and how practical it is.
I think with any "we'll bury the sucker" scheme, you're facing some rather problematic issues. How far down are you going to bury it? Turf moves around quite a bit when 300lb players stampede all over the place, sliding, falling, cutting (okay, maybe not the 300lb guys, but still). And you would have to make sure the chalk line is exactly representative of the buried "line".
As for the technology proposed (in the rumors), the coverage I read was that it was an RFID chip. Reading more in-depth coverage that may or may not be the case, but only with regards to the chip the transmits the information from the ball to the the antennas/receivers.
http://www.cairos.com/unternehmen/gltsystem.phphttp://www.gizmag.com/adidas-intelligent-football/8512/The system described on their site is conceptually very simple. A bunch of unshielded cables are strung across the field and a current is sent through them. An obvious system would be to have every other cable have a significantly different current through it (although in theory, you could have every single cable with a unique current -- they imply that on their site, but there are disadvantages and football would seem to lend itself to the "alternating" version).
Anyway, the point is simply that a sensor inside the ball measures the magnetic field from the nearby unshielded wires. To get a forward progress spot, you would need to measure the magnetic field from at least two wires (if you only had one, you would only be able to determine the distance from that one cable, but since the football could be on either side or indeed an unknown distance up in the air, that's not good enough). Given the strength of 2 magnetic fields would enable a "plane" (i.e. forward progress), while 3 or more would enable an exact point to be determined (triangulation).
Although I am a physicist and not unfamiliar with measurements like this (in very different settings), I wouldn't even begin to hazard a guess as to the accuracy. It could be many inches or a fraction of an inch. My guess as to limiting factors would be how accurately you could string the cables (and match the chalk lines) and how "stable" they would be during play. I'm also a bit concerned about the timing issue -- you wouldn't want to wind up with an "average" position taken over a second (or even less), it really would have to be RIGHT F'N NOW (high temporal resolution)... I know that this is what the company sells itself on (tracking dynamic objects), so presumably they feel confident, they have a good solution.
Without seeing it, there's no way of knowing, but the theory clearly seems better suited for football than soccer. The ball would simply by "streaming" its position in real-time and the ref would simply need to press a button the moment the ball is down and he would get the exact position of the ball at that exact moment.
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