0.3.4 was released a few weeks back. While it has seen some major improvements, the mouse/keyboard bug wasn't completely squashed in the release. However, it has been fixed in trunk by Aleksey, so all of you can stop complaining about it. On the other hand, people are reporting some major speed increases with this release. Thomas Bluemel's work on the desktop heap and Jim Tabor's work in deferring switchs between user and kernel mode seem to be paying off. The heap changes are definitely responsible for increases in GUI speed.
A few major developments have occurred on the gaming front. Magnus' work on DirectX is starting to show some major advances. Christoph von Wittich, another ReactOS developer, was able to run the Diablo 2 demo successfully. No one has tried to install the full game to my knowledge. Another tester also succeeded in getting Half Life to install and run on ReactOS. In this case, it was the full game.
For the time being, the 3D component of ReactX is from Wine's work in redirecting Direct3D calls to OpenGL. This is a temporary solution until Magnus completes a true implementation.
Aleksey recently got Freeloader, the ReactOS bootloader, to boot Windows Server 2003 without calling on 2k3's own ntldr. This is important on several fronts. Ntldr builds lists of the hardware configuration, modules, data table entries, memory allocation descriptors, PCR and TSS storage, and memory mapping specifics before handing all this information over to the kernel. Traditionally, open source bootloaders chainload ntldr as none of them are capable of producing lists in the format needed by the NT kernel. Freeloader is perhaps the first open source bootloader that doesn't need to chainload ntldr in order to boot Windows 2003, a major accomplishment. A few caveats exist though. Freeldr only supports booting Windows 2003 in the Windows family, at least for the time being. It also only boots from FAT32, though NTFS support is on the todo list.
The development team has always intended to port ReactOS to different architectures. While Art Yerkes has long worked on a PowerPC port, a series of commits have prepared ROS to run on the ARM processor. ARM is a RISC processor and the most popular design for embedded use, though there does exist a few specialized workstations. Having ReactOS run on ARM would present many interesting possibilities, including turning ROS into a mobile OS solution.