Mulgara is going ahead. The initial release looks set for the end of this month (July 2006). This first release will be based on an older version of Kowari from 1 August 2005. That date will avoid any code contributed to or by Northrup Grumman Corporation, even though their recent correspondance allows its use. It will also avoid a reported scalability bug while we investigate.
Unfortunately, several old Kowari bugs will temporarily reappear in Mulgara, but users may expect them to be quickly repaired. Those bugs include the lack of permanent model names and the presence of the Jena API and RDQL support.
Perhaps Mulgara can one day recombine with Kowari. The Mulgara team remains open to that possibility, but needs to move forward without waiting for further talks. Users are encouraged to follow Mulgara for new features in the meantime.