Yeah, you'e probably right. Wheew, I was worried for a moment. Heck when I first read it I thought it just said that any opponent would be considered flat-footed against this feat, now that would be horrific.
Even still, this feat will make Rogues the kings of bar room brawls.
Russ has it right, I believe. Monsters with claws, even in 3.0, were considered to be "armed with natural weapons." Which is goofy, but there you have it. Likewise for Improved Unarmed Strike, slam attacks, etc.
I'd rule out monsters with natural weapons, monks or PCs/NPCs with the improved unarmed strike feat, and even those who wear spiked gauntles (but not normal ones). They are all to be considered as armed.