Matthew Dillon: The project has been going very well. We've primarily been focused on the 'guts' of the system during this initial period, and you can get a fair idea of the work that has been accomplished so far by looking at the Diary page on our site.
Most of the work so far has been to operating systems internals. The work has been a combination of new work, like our light weight kernel threading core, plus selective backports from FreeBSD-5 to keep the system's device drivers up to date (e.g. such as the USB subsystem).
From a userland perspective we have maintained a FreeBSD style environment, so DragonFly basically runs everything that FreeBSD-4.x can run. The packaging system probably won't be done until the second release so we are at the moment leveraging off of FreeBSD's ports system for user apps. Everything you'd expect of a BSD system (X, mozilla, etc) is available to DragonFly users.
The first release is slated for some time in mid-June, hopefully before the USENIX Technical Conference. That will be the 1.0 release. We've been fairly careful to maintain as high a level of reliability as possible during development and I think we've done a pretty good job meeting that goal. The first release is intended to be more of a technology showpiece then an integrated end-user platform.