So, I get this error now every time I try to create a new Team Project. I've checked my SQL Reporting Services configuration and it's all Green. I'm creating this project as an administrator. I've searched for help online, of course, but so far, nothing. I'll update this post when I find the answer – in the meantime if you know what kind of animal sacrifice is required, please comment.

Update: Worked like a charm. Blog about it, and the answer will come. I found this forum thread during one more search. This led me to update my report data source credentials here:
http://localhost/Reports/Pages/DataSource.aspx?ItemPath=%2fTfsReportDS and that did the trick.