Interesting thread. Perhaps I can help clear up a few misconceptions.
There is a document you can search for in the Chinese State Council Gazette which lists the eligibility requirements for the Chinese "green card". There is an English version and a Chinese version. Unfortunately I am not allowed to link that here. In any event, the basic requirements are pretty clear so one would have a good idea whether they stood a chance or not. For example, one category would the the spouse of a Chinese citizen. It states that you need to be married for at least five years and for the last five years have been resident in China.
Once you decide to apply, you begin the process at your local Public Security Bureau and they will advise you what documentation you need to provide. In the case of someone applying as the spouse of a Chinese citizen, unless you were married outside of China, the documentation you need to provide is pretty easy to obtain. The certification of criminal record can be a pain in the neck, but doable with a bit of effort. The same for your US marriage certificate, if required.
Someone mentioned using relationships or contacts to smooth the application process. This is virtually impossible unless your contacts reach the highest levels of the Chinese government. Permanent residence applications are never approved on the local municipal or even provincial level. The city Public Security Bureau collets your application and performs a rather interesting yet thorough background check. They forward this -- without recommendations of any kind -- to the provincial level who promptly repeats the investigation. They then forward all the documentation to Beijing where it is decided by the Ministry of Public Security. They say the process lasts about six months, but in reality it can last almost a year.
So what are the rights, benefits and obligations? Obligations are few. Basically you need to keep your nose clean, pay your taxes and reside in China at least 3 months per year or 1 year per five. One of the benefits is that you definitely are covered and eligible for the Chinese public retirement / medical plan. Another, and what I consider the most important, is that you are exempt from visas and work permits. You can use the immigration e-channel when entering and departing China. Basically, the law says you have the same rights as Chinese nationals in all areas except for Party membership, government employment and performing military service. It's important to understand that even though you have certain basic rights, you may have to fight for them. The Chinese system and way of thinking is highly ethnocentric.
Taxation. Yes, you are taxed as a Chinese citizen, but not always. I mean, you should be taxed as a Chinese citizen, but local tax bureaus are notoriously stupid. They may insist as taxing you as an expat, which, in many aspects, is more favorable. I'm not worried about US taxation because since Chinese taxation is usually heavier, I end up owing little to nothing to the IRS every year. What you pay to Chinese tax authorities can be written off dollar for dollar from your net US tax liability.