Looks like a nice project. There are have been several other projects like this one over the years ("userfs" back in the old days, and another one called "avs" also on sourceforge, that I know of) but they were all abandoned eventually. Is there any chance that you'll work on getting lufs into the mainstream kernel someday? I think it really fills a niche that a lot of people want.
That would be nice. But I don't think lufs is ready yet, and even if it'd be, I understand there are some serious obstacles, one of the biggest being Linus himself. I have no experience in pushing stuff into the main tree, but I'm open for suggestions ;)
I can't image that would be TOO hard; I noticed the 2.5 kernel patch at least only creates files in fs/lufs/ and modifies 2 others in fs/.