From the dev team's blog "We are not working on the iPod Touch 2G right now, we certainly have interest in this platform as we have mentioned before and we have done some preliminary analysis, but currently all eyes are still on the iPhone 3G, we hope to pick up work on the iPod Touch 2G sometime in the near future and when we have any updates relating to this well blog about them here." Sounds like they haven't really started, which is somewhat good news, as I was starting to think it was just impossible
There's another dev group working on it too though (Chronic?) right? Maybe the dev team is hoping they make progress in the meantime? Hopefully doesn't end up requiring a hardware hack.