As I understnad it's hasn't been put on the back burner, it's just proving more difficut to implement than they thought. Apparnetly when they set up the E-mail system they didn't think the funky login would be a problem. Now that they have probably millions of addresses using that system it's a bit difficut to get everything converted over in a satisfactory manner.
I think that this had been put on the back buner a while ago - in 04 when it proved to difficut/impossible to accomplish. With this latest upgrade to debian sarge, it was supposed to be made a lot easier... but not easy enough I guess.
There was a post in this fourm somwhere a couple of mohtns ago when jeff (one of the dreamhost honchos) said it was their most voted for sigguestion. So they know it's an issue for their cusomters, and are working on it. But it never hurts to pester and remind them a litle. So vote for the sigguestion, or let support know how you feel.