See http://lists.w3.org/Archives/Public/public-webapps/2011JulSep/1622.html for the proposed API. This is a meta-bug, as the implementation is expected to be split into several patches.
The interface definitions are now listed in the DOM4 spec, which is a bit more readable than the mailing list archive: http://dvcs.w3.org/hg/domcore/raw-file/tip/Overview.html#mutations
(Just to update the URL for the Mutation Observers href in the DOM4 spec): http://dvcs.w3.org/hg/domcore/raw-file/tip/Overview.html#mutation-observers
This can be considered done at this point.