Tim Starling has fixed a few final bugs in this feature that's been in development and it should now be active on the various wikis.
Most of the user interface messages can now be modified directly by editing a special page in the 'MediaWiki:' namespace. Since this can be somewhat dangerous these pages are protected and editing is restricted to sysops.
So far this feature does not completely replace the LanguageXx.php files, but it should make it a lot easier to get most things adjusted without the delay of contacting the developers to get new versions of language files tested and installed. Additionally, custom messages may be used to insert common reusable bits of text into articles.
For some documentation, see: http://meta.wikipedia.org/wiki/Meta-Wikimedia:MediaWiki_namespace
and on the English wikipedia: http://en.wikipedia.org/wiki/Wikipedia:MediaWiki_namespace
-- brion vibber (brion @ pobox.com)