I use the RT feature in tweetie as a way to display short conversations to all my follwers. When someone mentions my handle I will often RT them with my own commentary allowing my other followers to read the entire conversation in one tweet and not have to click around. I would be very disappointed if Twitter chose to remove this ability all together. I think project retweet is a great idea for some uses, however, not everybody RT's the same way. I hope the third party applications allow me to still RT with my own commentary, if not for me, then for my followers who want both sides of a conversation in one tweet!
Thanks for this insight, Nathan and Hillary!

the whole point to a RT for me is to add my own commentary...how else can you stake some claim to a RT!

This hasn't rolled out to my account yet (heck, I only got Lists last weekend, so I must be on their bottom tier somehow), but I agree with Hillary - the retweeting functionality in Tweetdeck etc. is much better because it allows you to add context. While this new feature takes out some of those pesky extra characters of RT @soandso, losing the ability to comment is too much to make it terribly useful.

Interesting how Twitter Lists was a big hit, but a lot of the chatter around Project Retweet has been mixed. Some quotes that popped out at me immediately:

"They shouldn't have called it RT. It's a copy of FriendFeed's likes." - @Scobleizer on Twitter.

"Disappointed by the Twitter RT implementation, not surprisingly. It doesn't actually support the way people RT." - danah boyd (@zephoria) on Twitter.

I agree that the RT feature needs to evolve as Hillary described below. We'd love to hear what the rest of you think!

A few additional thoughts -

I assume that many people use third-party applications like TweetDeck, HootSuite or twhirl, in which case your initial reaction to this new feature might be, "big deal" since these applications already have built-in retweet functionality.

However, if you're like me and like to have Twitter.com open in the background and occasionally tweet from there, you will notice that while the new feature is very easy to use, you're unable to add additional context, which can often times be important or helpful when retweeting. It would be great to have a preview window that allowed you to add more context before sending the tweet instead of the confirmation window that says, "Retweet to your followers?" - What do you guys think?