Earlier this week, it was reported that an iPhone 1.1.3 jailbreak had been accomplished but would not be released. Amongst the reasons that the initial jailbreak would not be released was that the jailbreak was not completely software driven, and as such required hardware modification. While this news certainly didn't perk up the spirits of 1.1.3 adopters that were sorely missing their third party apps, the latest very well may. The most recent information indicates that the combined dev teams are well on their way to completing a new software jailbreak and that it could potentially be available to the public very soon.
A post on the hackint0sh forums from earlier today, by one of the members of the teams, announced that the teams had obtained the main filesystem key which is required to decrypt the firmware and obtain a mountable disk image to work with. According to the poster, vfdecrypt was used to create the mountable .dmg and the dev teams are now working "full throttle" on completing the jailbreak.
There has been some debate by the teams about whether or not to release the jailbreak method for fear that Apple will close up the jailbreak hole before the release of the SDK. This most recent development, obtaining the filesystem key, is allowing the teams to create a new jailbreak method without publicly releasing the first. All indications, at this point, are that the combined teams (the iPhone Dev Team and the Elite team) plan to release the new jailbreak method to the public before the SDK is released.