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Awesome news, I always wonder how the users react to these kind of switches. They switched everyone to open office, firefox and thunderbird while on Windows and then gradually switched to LiMux. It seems like they tried to make the DE very similar to windows NT to ease the transition[0].

[0] http://commons.wikimedia.org/wiki/File:LiMux.jpg

That screenshot is from 2004 as you can see in the bottom right corner. KDE3.5 isn't maintained anymore so I guess the infos in the wiki are partially out of date.
WIll be interesting to see how this fares long-term. The article doesn't mention why a custom distro was needed rather than one of the standards, and the running cost of now patching their own OS every time a linux bug or vulnerability is found.
It's ISO certified and AFAIK it's just Ubuntu (previously Debian) with some bells and whistles.
It's no custom distro. It's Ubuntu 10.10 LTS. Only thing which they added was WollMux: http://www.wollmux.net/wiki/Hauptseite

Also they switched from OpenOffice to LibreOffice

10 years is no short timespan to survive in politically influenced arena.
Great to see this project being completed after almost ten years. Several similar projects in Germany have failed (e.g. the parliament's attempt to converting to Linux) or Wienux in Vienna (http://en.wikipedia.org/wiki/Wienux). IMO, a major reason for the success of LiMux was the gradual change with extensive training and that the included developing custom templates and generators for Open Office etc.

For a timeline on the project: http://en.wikipedia.org/wiki/LiMux