Here is a screencast that shows TestDriven.NET running in Orcas and the new C# 3.0 support in Reflector 5.0. To start off with I create a reference to the new 'System.Core' assembly which you'll find in the '\Windows\Microsoft.NET\Framework\v3.5.11209' directory. C# 3.0 language features such as Linq and extension methods are only available after referencing this assembly. I then add a method with a simple query over a sequence of numbers.
After confirming that the code works, I use 'Go To Reflector' to view the simple Linq query inside Reflector. You can see what the query would look like if it was written using C# 2.0. I then go into the Reflector options and choose to optimize for .NET 3.5. When I go back to the 'Dissasembler' view you can see Reflector has successfully disassembled C# 3.0 Linq code! IMHO this is a great way to find out what's going on under the covers of C# 3.0.
Watch the screencast.
Download TestDriven.NET 2.2 Beta
Download Visual Studio Orcas Jan CTP