I tried KDE 4 (again) on Gentoo last night. It's unmasked in the tree so it was simple enough to install (if you're willing to use a masked Portage so you can use sets).
You can easily see improvement in KDE 4.2 compared to older versions of KDE 4. Everything generally works now, which is itself a change. Performance issues are almost gone; I can at least move and resize windows now without my system freezing. Delays in rendering popup menus are gone. All the shiny desktop effects worked right away with no hassle and everything looked great. A lot of the little nooks and crannies of previous missing features are filled in.
Some things are still not quite right though. I experienced massive stuttering in mplayer when I tried to watch a movie and do some other things at the same time. I managed to crash plasma once or twice just by resizing the main panel. I'm using two monitors and one monitor went totally blank for no reason I can determine, with only a one-inch strip of blue wallpaper at the top which was still right-clickable, while the other monitor kept working fine.
And other things are still broken beyond belief. All my system tray icons were invisible (reading the Gentoo MB apparently I'm not alone with that problem). Icons were a problem in general; random parts of the kmenu still had question-mark icons. Trying to download new themes of any sort via the "New Themes..." buttons in various system dialogs silently did nothing. When I opened Dolphin, all the menus were labeled "No Text", which was amusing. And I did manage to freeze-crash KDE4 when I tried to quit once, just like old times. Qtcurve wouldn't let me configure itself. GTK apps were themeless until I found an ebuild for a gtk-engines-kde4 ebuild in an overlay.
Installing KDE 4.2 and KDE 3.5 in parallel breaks tons of things in KDE3, e.g. the K menu is missing tons of stuff and has tons of extra KDE4 stuff that doesn't work, KControl no longer functions at all, the splash screen when you start is just a blank blue box, and so on. I'm now in the process of uninstalling KDE 4 (again) and trying to salvage my system (again).
Starting KDE 3 again after using KDE 4 for an hour, it's depressing how much smoother and more responsive it feels. I have hopes for KDE 4, it's clearly headed in the right direction, but I feel like it's going to be another year before it comes close to catching up to KDE 3.