Finally, DreamSNES details and progress have been updated which may answer some of your questions as to the progress. The main issue that they have been working on has been the sound. Here is the complete info straight from them:

Numerous persons have mailed me asking for some kind of progress report on the next release. Well, since it’s been rather many months since the last release, I figured I might deviate from my principles a little and actually give you one. All in the spirit of X-mas and so on…

Although we have all been doing other stuff, progress has not been nonexistent since the last release. The biggest endeavor has been getting the assembler CPU emulation core in place. While there’s still bugs left, it does run at least some games properly. And it does improve speed by some percent at least.

A considerable amount of effort has also been made on moving the emulation of the sound CPU over to the ARM CPU on the Dreamcast. Unfortunately, it now looks like the ARM is too slow for this to be a feasible solution, being clocked at only a disappointing 2.8 MHz.

Other developments include a new input system, which removes the need to configure controller types. Suitable controller emulation will automatically be chosen based on what DC controllers are attached at the time being.

All in all, stuff are still happening, but there’s still to much to do for another X-mas release to be possible. But fret not, I predict that we will find some other appropriate holiday to use. 🙂

Feel free to discuss anything on the official DreamSNES forums.

Big Thanks to Victor.