indeed. When you want to do a quick and dirty 'replace-string', this command looks very good. I've ended up copying the whole region to scratch to make my edits more than once.
If you use transient-mark-mode (which is on by default these days), you can mark a region and then use replacement commands like query-replace (M-%) that affect just that region.
I had tried that before transient-mark-mode was on by default (Emacs 23?) and it didn't work, but turns out you are 100% correct.
Thanks ramen!
Undo also works on the region, which is amazingly useful.