There's really not much information in this article, and consequently it reads a tad sensationalist to me. Let me try to break this situation down as I understand it.

IAANRO (I Am A Nuclear Reactor Operator. I work part-time at my college's research reactor[1])

Nuclear power reactors are of two main varieties: Pressurized Water Reactors, and Boiling Water Reactors[2]. The plant in question is a Boiling Water Reactor (BWR). BWRs work by using the core's thermal energy to boil the cooling water into steam, and then channelling the steam in order to turn a steam turbine. After it exits the turbine, the steam is cooled in a condenser, where it turns back to water, and then is sent back into the core. The condenser requires cool water to be actively pumped through it, to keep the pipes upon which the steam condenses from becoming too hot. The water/steam that runs through the core and the turbine is referred to as the "primary cooling system", and the water running through the condenser is the "secondary cooling system." The primary is assumed to be contaminated (that is, it is measurably radioactive), whereas the secondary system is not, since it is isolated from the primary.

As far as I can tell, the chain of events for this particular plant went something like this:

Shortly after the quake, the reactor successfully shut down in anticipation of the tsunami. This means that no more fission is occurring in the core. Since a core meltdown is a result of uncontrolled fission, this means that the reactor is now incapable of melting down. This will not be another Chernobyl. However, just because U-235 is no longer fissioning, doesn't mean that the core isn't producing heat. The fission fragments (those isotopes produced as a result of the U-235 fissioning) will continue to decay through alpha, beta, or gamma emission, until stable elements at the bottom of the decay chain are reached. The decay of these fission fragments and their decay products will cause the core to continue to produce heat for some time after shutdown.

Presumably due to the fact that every reactor near the east coast of Japan was being shutdown, offsite power for the secondary cooling system was unavailable, so the power plant had to rely on onsite backup power, but the onsite power only lasted for 8 hours. After that, the secondary cooling system failed, which is what triggered the declaration of the Nuclear Emergency, and evacuation of those living within 3Km of the plant.

Since the core is continuing to produce heat, and consequently steam, the steam pressure inside the primary system is rising above normal levels. They are hesitant to bleed off steam into the containment dome, since the dome was probably damaged in the quake, but obviously bleeding off some steam is better than having the primary system rupture. Thankfully, most of the really nasty decay products have a relatively short half-life. In particular, Nitrogen-16, which gives off pretty high energy betas when it decays, has a half-life of 7.2 seconds.

Therefore, releasing the steam is undesirable, but not catastrophic, and probably not even particularly hazardous. The radioactive materials in the cloud will be longer-lived decay products of hydrogen and oxygen in, and as far as I'm aware none of those are particularly active. The cloud will be dilute itself after release, which will lower the intensity of the radiation field significantly. Therefore, the total radioactivity release will be many orders of magnitude lower than that of Chernobyl or Three Mile Island. The media is playing this up to be bigger than it is, because nuclear power still carries a stigma.

[1]: Reed Research Reactor: http://reactor.reed.edu/

[2]: Wikipedia Article on Boiling Water Reactors: http://en.wikipedia.org/wiki/Boiling_water_reactor