Nope, Kelo was in essence about the expansion of 'public use' to include takings strictly for 'economic development', and was that constitutional. The ruling was a narrow one that basically said that it wasn't in theory unconstitutional. But part of a court's opinion is often based on determining the will of the people, as expressed through the legislature, the voice of the people via the ballot box. What this EO does is put the administration on record as stating that 'economic development' alone is not a 'public use'. As an elected office, the President is similarly a voice of the people, though it would provide a stronger foundation if Congress was to pass a similar law expressing its intent on how far 'public use' should be defined.
This is not at all toothless, it is rather another tool in the battle taking place on the legal front, giving judges in future cases more ammo to use if they choose to. And as others have noted, there are other ways in which this EO will curtail takings for economic development. It is a multi-faceted approach.
In a political sense (i.e. putting the Administration on record as opposing Kelo) it makes sense. But, outside of the executive branch, it has no power, as it explicitly states. And even if the executive branch violates it's own policy, it still adds nothing to the arsenal of the property owner to challenge a claim of eminent domain. So, in the real world sense, I'm sorry, it's still toothless.