Also in 2005, the Visual Studio team approached the core WiX development team about replacing their custom MSI build system with the WiX toolset. Derek was at every meeting with me. Together we answered their questions, discussed timelines and feature requests and ultimately convinced the Visual Studio team to bet on WiX v3 for their next release of Visual Studio. Without Derek's experiences integrating WiX into Office, I'm not sure we could have convinced Visual Studio to pick up the WiX toolset.
Visual Studio to use an WiX as its installer description language! Will this be a new feature in Visual Studio Orcas? Back in my pre-WiX days, .vdproj files caused me so much pain. News of this decision is music to my ears. Way to go Derek, Rob and the WiX team! From a selfish POV I'm sorry to hear Derek is moving on. Best of luck in your mysterious new venture.
Update: I'm afraid I jumped the gun. WiX will only be used to create the MSI file for Visual Studio itself. If you think replacing .vdproj with WiX is a good idea, please leave a note on Rob's informal poll. Hopefully it won't be long before Microsoft is eating their famous dog food. ;-)