So, 2.7 is coming and it will have native threaded comments (Yay!). It will even pick up seamlessly from plugins like Wordpress Thread Comments and preserve all the threading you already have (Yay!!). What it doesn't have is email notifications to the parent comment author (Argh!).
Since this is currently being left up to plugin authors to do, I wrote a plugin to do it
. It's a lot like LJ comments: simple html and it quotes the parent comment and then the new one and has a link to the thread.
While I was at it, I wrote up a plugin to do the same thing to post-author notifications of new comments (quoting parent and html-ified).
And, while I was in the groove, I rewrote my old patch of the LJ icon + Gravatars plugin--in fact, I rewrote it sufficiently that I gave it a new name. It now recognizes LJ, IJ, JF, GJ and DeadJournal just because; new Danga-type sites can be added easily (anyone know of any more that should go in?).
To top off, since the lack of local user icons was driving me batty, I split off that function into its own plugin. It's pretty simple, but it will let any logged in user with file upload abilities load, replace and delete a local user icon.
Note, both of these run on top of the native get_avatar function, so your theme needs to have that in place for the plugins to work. On the bright side, that function is automatically bundled with the shiny new wp_list_comments function that comes with 2.7.