Katharine, this is a wonderful set of pics and really shows what a difference shadows make in creating a convincing environment.

Looks as though alpha textures such as trees and the sandbox sign cast proper shadows as one would expect, although it seems like the edges are courser, maybe similar to the 64x64 low detail we saw in dynamic reflections on shiny surfaces in the past? (via the Debug menu)

A couple questions: can shadows be cast by local lights, or is this limited to just the sun and the moon? And have you tried rezzing more local lights than just the six we're normally limited to having active?

Could you use local lights to create an indoor space lit with plain white lights that would override some wild Windlight preset colored the sky outside (thus fixing some peoples' complaints about Windlight)?

(heh heh, i think i just need to figure out how to compile one of these for myself)