Umm... is it not true that Microsoft has stopped the work on Milestones (eg, Milestone 9) and started work on Beta 1? I think it was mentioned in Paul Thurrott's daily newsletter.
I personally think Microsoft has held some nice info or feature of Longhorn from the general public and will use that to mesmerize everyone at PDC. I hope its "Guess what, we have Longhorn ready, here, take your copy." ... sigh ... I know, I know.
Anyways, so if they are working on Beta 1 right now, it doesn't seem impossible to get out a Beta to the PDC goers in almost 10 months.