The most damning problem in the ActiveState report is that the CLR cannot directly support a number of Python's language features.
C doesn't "directly" support a number of Python's language features and neither does the JVM. Yet, both of them have excellent Python implementations based on them.
But, I think that if anyone can pull this off, Jim can. The concern I have is whether he can keep the language alive. Development on his Jython project seems to have ground to a halt since the release of Jython-2.2a1 last summer.
Well, I used to be a very active Java and Jython user myself, but I just got pissed off by Sun's policies and have no incentive to contribute to Java or Java-related technologies anymore. I suspect many people in the OSS community feel the same way. And I suspect that's also the reason why Hugunin, a long-time open source developer and Java developer, himself is now building a project like IronPython on top of the CLR.
You will note that IronPython is not yet passing enough of Python's regression tests to work on many interesting language problems. Once it gets to that point, then I'll be interested.
It should require no more work to do that with IronPython than it did with Jython.
As an aside, I think in part, however, some of these issues are better addressed by changing the Python language; Python exposes implementation details (e.g., the use of dictionaries in objects) that make efficient implementations unnecessarily hard. I hope Hugunin will actually push for language changes and not strive for full compliance with Python's regression tests. Jython already had some beneficial effects on the Python language in that way.