Thanks for the video. I have been waiting for VS2008 and 3.5 Framework to enable this functionality in a project I am working on.

I have spent a few days playing with this and just thought I would post a couple of things I have found out here on the off chance it helps someone else out.

First with 3.5 you dont need to add the tag mappings as shown in the video to your web.config.

Second, I originally had a WebPartManager control in a masterpage and wrapped a ProxyWebPartManager control in an Update Panel within a User Control. I found that this lost drag \ drop functionality of controls between WebPartZones. To fix this I deleted the ProxyWebPartManager control and moved the WebPartManager control from my masterpage directly to my User control and wrapped this within an update panel. Drag \ drop functionality now works ok in IE7. This does not seem to support FireFox or Safari yet but its a good start. I plan to use a LayoutEditorPart to enable these users to move controls between zones and hopefully future .net framework versions will have cross browser support for drag \ drop.