I had the exact same problem (twice!) and had my battery replaced under warranty - I seem to recall there was a battery replacement program for this issue (don't quote me) but even if there was I suppose that would have finished now.
I'd say you might have a chance if you called and explained the issue or went into an Apple store depending on what kind of person you run in to.
There was also a firmware update that was meant to help solve this issue, but it didn't help me and I suppose you'd have gotten that through software update long ago.
Long story short: It's not that the battery isn't holding enough charge, and not that it's had too many cycles - evidently they just had an issue with their battery production, and your machine has taken this long to be affected by it. Hopefully you get someone nice from Apple, but otherwise a trip to eBay or somewhere else on the internet should be able to get you a new battery for relatively cheap.
Good luck, hope it works out for you.
Does the real-world battery life scale linearly with it's capacity?
No, because it also depends on current draw. If you have a 10 watt hour battery, and you pull 10 watts from it, you will likely get less than 1 hour of time due to losses inside the battery.
If you instead pull 1 watt from it, you'll get closer to 10 hours of usage, because the losses are not as good at lower current draws.
As batteries age the losses become worse. The internal damage that occurs over time due to the charge/discharge cycle causes additional internal cell resistance. So a new battery will give you more of its rated capacity (and use less internally during use) than an old battery. The old battery will give you less of its rated capacity (and consume more internally than the new battery) than a new battery would.
Is this number a reliable indicator of present and future battery life?
It's an estimate, and now that the battery has higher internal losses it will depend much more greatly on how much power you're drawing. If you're using the processor and graphics chipset at capacity, then add wireless, bright screen, etc on top of that you probably won't be able to use the entire measured capacity.
Therefore it's not reliable, as it depends on your actual usage scenario.
If, instead, you've got it playing itunes with the lid closed, it will use a larger percentage of that capacity before it indicates depletion.
What kind of realistic usage am I likely to get from a new battery under Lion?
Unfortunately you're trying to compare Lion's consumption with your previous OS consumption. I can't answer that question, and even if I had the same model and recently changed the battery I have a different use case, so my experience wouldn't necessarily apply to use.
I can tell you that often one battery will degenerate more than the others in multi cell pack, and if discharged under controlled conditions you can get the full capacity of each individual cell, but under heavy discharge the bad cell is a weak link, and the whole battery pack will shut down prior to depleting the other good cells.
This means that there are several good reasons to replace your battery, and the most likely outcome is significantly increased battery life.
However there's no way to guarantee that due to your individual circumstances and usage. The tools you're using are ok, but without removing and testing each cell individually under a few different discharge conditions you can't know fully how the battery will compare to new batteries. So the tools can't be counted on to give you more than a rough estimate.
If I were in your situation, though, I'd expect to get approximately the same life out of a new battery under Lion as I got out of the new battery under the previous OS. The difference might be slightly greater, but still minimal.
Best Answer
At this speed, the Mac will have a dead battery in around 6 years. Probably below useful levels in less than 5 years. As the Mac is already around 4 years old, that means around 7 to 9 years of battery life. Which seems quite decent considering that laptop batteries are expected to last 2 to 4 years, according to a quick Google search.
In other words, you are probably doing everything right.
As mentioned before, heat (and cold) is an issue. However, leaving it plugged in during work should not be a problem, as cycles add more to battery loss than leaving it at high charge. So the rule about 20% to 80% is more useful for storage than for an actively used Mac, as it will add cycles to always move between the two values. Reconditioning a battery also adds cycles, usually without any advantages. Do that only if the battery has serious issues. When you don't work, keep it unplugged, but make sure you reload it before it gets below 20%, and only up to 60% if you don't intend to use it for a longer time.