I'm normally against the creation of new projects, but this sounds like a pretty good idea. Presumably, it'll be a little like Commons but instead of images, would handle citations. I suppose other Wikimedia projects will make use of this, do you hope to allow non-WikiMedia projects to use it?

Strictly speaking, citation is its own project (coming very shortly, I hope):

http://meta.wikimedia.org/wiki/Wikicite

Wikicat will simply act as the data back-end to support citation, though both projects are very interrelated. For example, citing a work for the first time will import it into Wikicat, while editing a work within Wikicat will affect the data displayed by all Wikipedia articles citing it.

The software for this is being written as an extension so it should be useable by any Mediawiki installation.

The project will aim to catalogue books, news, journals, what else? Film?

Yes, everything that is currently catalogable will be supported: books, journals, film, artwork and artifacts, maps, electronic resources, recorded sound, natural specimens and realia, etc. It will be like an IMDB for everything. What will separate it from existing catalogs, hopefully, is its detail- entries for a particular journal will describe every article contained within its issues, an entry for a movie will show every song or piece of music used on its soundtrack, etc. Wikicat will also use the model proposed in Functional Requirements for Bibliographic Records (FRBR) so that the same or related content can be easily found, no matter what form its published in:

http://www.frbr.org/eg/hp-goblet-1.html

How will different referencing styles be handled?

This is still an open issue, but the idea is to use a single, very compact style so that every citation can be captured as structured data and used to populate a "text relationship" database (the focus of a 3rd project: http://meta.wikimedia.org/wiki/WikiTextrose). This will contain a database of all citations, from Wikipedia articles to published works, and from those published works to other published works, including perhaps someday back to Wikpedia articles :) This will allow lots of useful functionality, one example of which is that users will be able to follow a citation from a Wikipedia article to a work, see all the works which it cites, and then perhaps improve the article by using more specialized material than the work which the article originally cited.

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