With many of the open-source drivers currently lacking any form of GPU-based video decoding acceleration (such as XvMC or the forthcoming VA-API), this will be a terrific feature as it will provide this functionality once the drivers make the switch to Tungsten's Gallium3D as this method doesn't require any hardware/driver-specific work. This Summer of Code work is focusing upon an XvMC (X-Video Motion Compensation) front-end, which right now is limited to MPEG-2 acceleration, but more video standards may be added later.
Anyhow, the latest news (albeit a week late) on this development work can be found on the developers website. He has posted a few screenshots from test clips now that he has made some additional progress with field-based prediction working. The way this young developer is achieving this feat is through writing shaders with Gallium3D. Right now he's relying upon the Gallium3D soft-pipe driver, but according to his road-map he hopes to have it running with the open-source NVIDIA "Nouveau" driver by the end of the month. If all goes according to plan, by the end of August there should be performance tuning, bug fixes, documentation, and the rest of what's needed to make it a viable piece of software.