We have reached the point where custom elements and shadow DOM slowly make their way into other standards. The Custom Elements draft has been reformatted as a series of patches by Domenic and I have been migrating parts of the Shadow DOM draft into the DOM Standard and HTML Standard. Once done this should remove a whole bunch of implementation questions that have come up and essentially turn these features into new fundamental primitives all other features will have to cope with.
There are still a number of open issues for which we need to reach rough consensus and input on those would certainly be appreciated. And there is still quite a bit of work to be done once those issues are resolved. Many features in HTML and CSS will need to be adjusted to work correctly within shadow trees. E.g., as things stand today in the HTML Standard a script element does not execute, an img element does not load, et cetera.