It is still a complete crap shoot. I applied for my children's passports at a US Post Office on 3/19/07 and it's still "processing" with no additional information available. There is no rhyme or reason why some people are taking forever to process, and some people are promptly processed. When I emailed to ask status, I got an email back for one of my children to please allow "10-14 weeks" which is up from the 10-12 weeks still listed on the website. The other child didn't get a response from the US Dept of State. Of course, no one wants to talk to you unless you are within 2 weeks of travel.

Also, the US isn't requiring passports for Mexico/Canada/Caribbean travel *back to the US*, but those places may require a birth certificate (not just a picture ID like drivers license) to get in. I've heard some stories where people still couldn't travel because they didn't have their BCs --- they weren't allowed to get on the plane. To apply for a passport, you had to send in the original birth certificate, so many people may still be in the same boat (though it may be faster to get a BC).