Interesting find, Jason. I missed my point because I believed Books Online. The only small critisism (sp?) I have on this question is the incorrect use of uppercase ("MODEL" instead of "model"), which will cause errors on a server with a case sensitive collation.
UMG's comment is not entirely correct. SQL Server does nog ignore the READ_ONLY property in model; it just does not propagate it to the new database. Try createing a table in model after setting it to READ_ONLY; you'll see that this fails.
It does of course make sense that the READ_ONLY property won't propagate. After all, creating a database involves writing by itself! And I can also see the value in using READ_ONLY to protect from accidental changes to the model database.
It's just a big shame that the description in Books Online is completely wrong!
Hugo Kornelis, SQL Server MVP
Visit my SQL Server blog: http://sqlblog.com/blogs/hugo_kornelis