I have started an effort of trying my luck at cracking 1.1.1. First let me start out by explianing what I KNOW about this process.
Fact: The new firmware is encrypted
Fact: The new firmware can only be accessed and managed by the new iTunes 7.4 (released along side the 1.1.1 firmware)
Fact: iTunes CAN sync with this new firmware so it must have a method for getting into the phone and managing files, contacts, book marks etc........ the only way it can do this theoretically is either through a sync server running on the phone AND/OR via root access to the file system
FACT: iTunes has to have the key in it, to manage the phone.......
Theory: Decompile iTunes, and figure out what its doing so we can utilize the same method to get in, and jailbreak it.
This is my initial thoughts on the idea anyone else interested can pm me or watch here for updates and what i learn along the way.