You may have learned already to reconfigure your WP3 so that it loads in MU mode, and set it for subdomains.
Evidently my Dallas client claims that instead of just subdomains, there are some tricks you can do (cpanel? wp-admin? plugin? config file change?) to make a full domain like example.com for a subdomain, instead of having a subdomain like blog1.example.com.
Is this true? How is it achieved? Does it have any caveats that you can think of?
You can map regular domains to a WordPress Multisite installation using the WordPress MU Domain Mapping plugin.
There’s also a great tutorial available: WordPress 3.0: Multisite Domain Mapping Tutorial
For reference … I asked a similar question yesterday. I have a client who hosts multiple blogs with unique domains, but it becomes a hassle to maintain each one separately. I’m working with them to transition to a Multisite setup instead – single superuser admin, single set of plug-ins, single set of themes, single set of core files … much easier to upgrade and maintain.
For reference, here is another tutorial on how to setup WordPress Multisite with multiple domains: WordPress 3.0 Multisite With Multiple Domains Setup