"And what happens to MonoRail? – you may ask. I’m not sure. I was really adamant that they should try to support all things that MonoRail support, but I’m not sure they are going for that. MonoRail 2.0 is pending their implementation. If the final MS MVC rocks, and provides so many things, I’d vote for forget the MR 2. If the final MS MVC has clearly something lacking, MR 2 could reuse the infrastructure and provide some nice extensions."
In his most recent blog post MVC Experiments, hammet includes the samples for download that he created on his visit to Microsoft.
Finally, the front page of the Castle Project site includes a letter to the .NET Community regarding the Microsoft MVC starts off:
"You are probably wondering how the recently announced Microsoft MVC project will compete with Castle’s MonoRail. We think that any attempt to offer more productive tools, better testability and better separation of concerns is valuable, no matter who is the author."
And finishes with:
"Is MS’ MVC better? Worse? Only once we have used both will we be able to tell."
So only time will tell if one or both will continue on. Microsoft has invested some great developers on the project so we should see some interesting options in the future. For the MonoRail team, imitation is the sincerest form of flattery.