This is a great hope but also a crazy idea. It would be so complicated to add multilingual content support to WP that it almost seems impossible. It's a tragedy that no awesome plugins are blowing people away.
For those looking for a plugin solution WPML is a new player and they seem to have a translation service backing development which is probably good for long-term stability. Their plugin has a ton of features including handling gettext/i18n support for plugins, themes and core. I still don't like how they manage the database and I think it makes a huge mess of your content. In most ways though its the only kind of solution that could work for keeping all content in one blog database.
Anyone wanting to read about the state of translation in WP should read the Multilingual WordPress Codex article, it summarizes the major plugins as well as the fundamental approaches currently in use.
IMHO the best solution for WP if it want's to support multilingual content in core is a distributed model where each language is its own individual blog/site. With the advent of "Multi-Site" in core this would be easier than ever for people to do with just one WP install.
Each language would be its own blog on the site (MU-style) and the translation system (whether its a core plugin or part of core) manages the relationships between posts across installations, noting the source of a translation and allowing links to be shown back and forth between matched content. You'd also have global navigation between the linked translation sites to use in the header etc.
If you had a multilingual theme (gettext/i18n support) then you could use one theme to power all of your language sites by having multiple translations of the theme. The same would obviously go for plugins, core transltions etc. The difference could be integrated with the existing backend language infrastructure.
Because it would all be one MU/MS instance users wouldn't have to log into the translation sites again either, though they'd have to be given access to each language site to have permissions on it, just like in any MU/MS situation.