The first preview of Mono 2.6 has been released here. This has a much improved version of xbuild.
Major new features since Mono 2.4:
- Solution file support
- ASP.NET project support, both WebApplication and WebSite projects
- It can now resolve references from pkg-config files (eg. gtk-sharp.pc)
- Pre/PostBuildEvents are supported
- Before/After* hooks and *DependsOn properties have been added for various targets like Build/Clean, to allow extending them
You can see the full release notes for xbuild here.
So, effectively, you can use xbuild to build your VS2005/VS2008 solutions and projects. C# and VB.NET projects are supported out of the box. It supports the usual stuff like embedded resources, satellite assemblies, project references etc. Some opensource projects that work fine with xbuild : IronRuby, IronPython, OpenTK, etc.
Note: Multi-targeting is not implemented yet, but it should be available in the next preview release.
There might some windowism’s that might hinder things, for which you should see Porting MSBuild projects to xbuild. Feedback is welcome on improving that page.
Custom tasks and targets should work with xbuild. Not every api that your custom task might be using would have been implemented, so file a bug incase it is not.
So, this is an excellent time to try out your msbuild project with xbuild and help make it better 
File bugs here. Any kind of feedback on xbuild, positive/negative, is very welcome!
The wiki page Microsoft.Build has been updated with the current xbuild status.
Update: Short xbuild survey.
