While I have been critical about them signing Adam Kennedy over Orlando Hudson and signing Willy Taveras, to a contract, there is a decent chance the Nationals get this signing right.
As a disclaimer, I am fully aware that Wang has been hampered by injuries which could make the following discussion null and void.
One reason I think this is a smart signing is that ghastly 9.64 ERA is highly fluky and there's no way he could pitch that bad for two years in a row. Taking a closer look at his 2009 numbers it looks like he got horribly......horribly....atrociously unlucky last year. Hitters had a .407 BABIP against him. That is 110 points higher than his career total. Whatever comes up must come down and that BABIP should regress to somewhere around that .297 career total (regardless of whether or not he pitches better) which in turn should return his numbers closer to his 2005-2008 totals.
Point being, even if he doesn't pitch any better in 2010, his ERA should drastically improve as a BABIP that off the charts high is not sustainable for the long term. Another reason is he got unlucky with fly balls turning into home runs. While Wang struggled both at home and on the road, getting away from Yankee Stadium should help. Opposing hitters had a 1.091 OPS against him at home. It's clear that he got unlucky with giving him home runs as well as his 1.5 HR/9 innings allowed is twice as high as his previous career high ( and more than three times his totals from 2006 & 2007 when he led the AL in this category).
Also, Wang isn't that old (he'll be 30 by opening day) so I wouldn't write him off as washed out. From his prior body of work, it is clear he knows how to pitch ( outside of 2009, he was an above league average pitcher and as recent as 4 years ago he was second in Cy Young Voting).
My point is don't write of Chien-Ming Wang because the bottom fell out in 2009. He didn't have a bad season because he forgot how to pitch, he had a bad season because he got about as unlucky as a pitcher could be within the scope of 42 innings. The Nationals have made a lot of dumb moves over the year, this move bucks the trend as it is a savvy low-risk high reward move.