A couple of documents worth reading to get some context on what we're doing in the Identity space:
The Identity MetaSystem
The Laws of Identity
I've been silent the last few months on WSE topics, the reason is actually simple: at the turn of the year I changed roles (was he pushed or did he jump?) to work on Active Directory Federation Server (ADFS) and InfoCard.
ADFS will ship as part of the Windows Server 2003 R2 release and implements the WS-Federation Passive Profile, over time ADFS will evolve to become a full-blown WS-Federation / WS-Trust Security Token Service. InfoCard, a system for managing your identities, will be part of Indigo.
Whilst I'm a little sad to have left WSE behind, I'm sure that Mark will do a good job of herding the cats for the next release.