For all those who abstained from voting (I want to assume some readers must have known the identity of our mystery caterpillar, but were too lazy to comment), here is the answer (after the break).
The caterpillar is Hemileuca maia (Saturniidae). Those spines do indeed give a pretty nasty sting. Only a tiny bit superficially similar to a gypsy moth.
Und, for those of you paying attention: The Genius of the Press before last also needed an answer, which is almost too obvious to state. Butterflies do not eat leaves, and especially monarchs do not eat eucalyptus. The reporter must have failed second grade (and subsequently hired at the Santa Barbara News Press).
holy crap.