It can unofficially be done. Only if you are a genius hacker though.
What they have is third party apps running somewhat natively, you can activate the iPhone, mobile terminal apps work, and BSD stuff works. However they are nowhere near close to an app or set of installation instructions for the general user.
They also found out some things like Sprinboard doesn’t recognize DisplayOrder.plist which means that you probably won’t be able to get your apps into Springboard because the Apple apps all appear to be hard coded into Springboard. They also found that they will likely have to recompile most of the third party apps for the new frameworks.
On top of that they found that 1.1.1 references com.apple.mobile.radio as well as com.apple.mobile.nike. Other than that they just found that the 1.1.1 binaries, such as for the mobile itunes store, won’t work on 1.0.2 without some serious hacking. So, keep it up iPhone Dev Team, you are doing a great job, don’t forget to let us know when you come up with a user-oriented version of the Jailbreak.
