Developer "cicada" (known to some by his mild-mannered alter-ego, Pat King) recently chatted with Android Central about his Nookie Froyo ROM (run off an SD card on the Nook Color). He promises that a flashable zip of Nookie Froyo will be here "very soon" and that, at this stage, he's merely "working through a couple of bugs." While methods have surfaced to install Nookie on the internal memory via adb, a flashable zip would provide users with the luxury of a simple install via ClockworkMod Recovery.
When asked about the unique challenges of developing the first custom ROM for a device that's sold as an e-reader, cicada said that "shoe-horning an OS tailored specifically for cellphones onto a device without most of the cellphone bits definitely made things tough (and was likely Google's reasoning behind their famous 'android isn't ready for tablets' statement)."
Cicada wants Nookie Froyo to be a project for the dev community, "something developers can use as a solid base for making the really cool stuff." He added that it's not much of a secret that CM7 is being worked on for the Nook Color, and that he's been part of "a two-way street" of development with Cyanogen's TeamDouche.
As for the continued potential of the Nook as a tablet? Cicada states that the NC is "the perfect entry-level android tablet. It's cheap, it's nimble, and perfectly usable as a legitimate tablet, with only the minor fuss of freeing it from B&N's default software of course. ;) "