I have seen the future -- specifically Windows 7 Milestone 3 (Build 6780).
I got a gander at the latest test build of Windows 7 briefly (courtesy of a source of mine) and was not allowed to take any screenshots. But it is real, it does exist and it is, indeed, in certain testers' hands inside and outside the company.
From the quick glimpse I got of Milestone 3, it sounds like Bryant of AeroXperience was right on the money with his hypotheses about what's changed in the latest internal test builds. The latest build seems quite stable. The Ribbon user interface from Office 2007 is now part of WordPad and Paint. Home Groups -- the functionality formerly known in "Longhorn"/Vista as "Castle" -- is part of the new Windows 7 build.
I also noticed that the "Graphical Console," a k a PowerShell Version 2, seems to be part of the latest pre-release Windows 7 build.
(Looks like Stephen Chapman over at the UX Evangelist site got to see Build 6780, too, and has a lot more to say on Windows 7's Paint and WordPad.)
From what admittedly little I had a chance to see, Windows 7 does not look or feel like a major departure from Windows Vista.
Sources say there isn't an "M4" currently on Microsoft's Windows 7 schedule. Next up is likely some kind of preview build (which may or may not be distributed to those attending the Professional Developers Conference and/or Windows Hardware Engineering Conference in October and November, respectively.) After that, a broadscale Beta 1, which should be feature-complete and pretty much set in stone, is expected for mid-December.
Like my ZDNet blogging colleague Ed Bott said, it's not impossible for Microsoft to hit a 2009 release for Windows 7 if the first true beta doesn't go out until December. Such a move would not be unprecedented.
Do you think the Softies are going to get Windows 7 out the door in 2009, as they are hoping -- and maybe even early enough to make it onto new machines in time for Holiday 2009 sales?