It is in Google's interest to be CC-friendly. If more content is freely available, they can index and search it without lawsuit fear. Then, why don't they allow a simple licensing tool like Flickr does for YouTube uploaders? Since they have a more direct relationship with "Directors" (those users who can post clips longer than 10 minutes due to originality), I imagine at least those folks should have that option, if not everyone.

Any thoughts as to why they don't have that capability?

Well, I'm not so sure their interest is to be "CC-friendly". Read their mission again. _The world_'s information. Based on what I've seen so far, I think they mean all of it. Not just freely available ones. Their real goal is to change the licencing and copyright mentality, _to be sued_ (and that's really why they bought YouTube – http://www.michiknows.com/2007/03/14/maybe-google-wanted-to-be-sued-youtube-and-plan-b/) and to win, to then be able to index a much wider range of information in a world that allows them to do so. Focusing on CC features would have opposite effect on that goal, killing their main argument that currently it's hard to see what exactly is copyrighted and how, and it should be non-scalable humans' job to reactively complain and filter if they really want something not to be shown.

Here are some more ways where Google could integrate Creative Commons support:

http://blogoscoped.com/archive/2007-01-04-n81.html