[error99]

"...the development could enable cost and size reductions in rockets as they could use air in the atmosphere as a means of propulsion, rather than having to carry fuel..."
--
Yeah, now that heavy fuel can be replaced by heavy storage batteries.
And, there isn't any 'air' in space to heat up in order to get the propulsive effect.
Just a few of the bugs that need to be worked out, thats all.

[alnitak]

The atmosphere is used as the reactant-mass while you're in it. The microwave energy is beamed up from the ground - this is the key point, existing craft have to carry all their fuel, which is heavy, hence step-rockets. Beamed energy solutions let you leave the fuel on the ground - not to mention the power plant. As for when you get out of the atmosphere, well you can carry anything to act as reactant mass, say liquid air or water, though I imagine liquid hydrogen would be best because of its low mass.

[Trailer Trash]

"Yeah, now that heavy fuel can be replaced by heavy storage batteries."

The microwave generator never leaves the ground. The beam is focused upon the aircraft, and the resulting reaction creates the thrust.