The power has been expanded??
The USSC held that "public use" equals "public purpose" many years ago. I believe it was in the 1890's. I'd have to look up the case.
Government power has not been expanded.
BTW, would you feel better if the New London urban renewal project created government owned buildings instead of privately owned buildings?
Before Kelo, the two most recent relevant decisions were Berman and Midkiff. Midkiff was more of a special case, and though abusive, it didn't introduce an element of moral hazard. Berman was the ruling that held that "blight" could be used as justification for condemnation.
This post at SCOTUSblog was the most heartening thing I've read on the subject. It gave me hope that the backlash to Kelo might produce political action, despite the opposing intentions of our rulers. The perfect storm? I hope so.