Yes, the AP acts like a park hopper. There is also the Premium AP that also allows you to visit the water parks, etc... as well as the 4 major parks.
I don't think the 8 day figure is accurate any longer, at least for non-DVC pass purchasers. I've noticed that the prices for the AP's have steadily increased over the past 5 years. Right now the DVC discount price for a regular AP is close to the full price from 2002. Its something you want to watch out for and just do a quick comparison of prices at the time you are purchasing.
We have been using annual passes for 2 or more trips in a calendar year, then letting them expire...then getting another set for our next round of trips, usually anywhere from 12-18 months later. We're taking a long break right now. Our record so far is 32 days in the parks over the course of a year. We have 15 days planned for the passes we'll be getting in October 2008... and my dh also has to work in Maitland occasionally so we may fit in a couple more days.
I will give one warning though....when you have annual passes you tend to fall victim to the "hey, let's go to Disney" bug. You'll see a good room rate somewhere for a weekend you're available (or a really low airfare deal, for those who fly) and its hard to not just whip out the credit card for another quick trip! After all, the major expense of going to Disney- tickets - just isn't a problem!