Michael Arrington has just published a post about how a decentralized Twitter might work called "Twitter can be liberated". Much of it was based on a discussion we had on the subject and how RSS, XMPP and Microblogging software could create a decentralized Twitter (Much like Wordpress, Blogger and LiveJournal are decentralized software platforms for traditional blogging).
The key component would be an easy bridge between RSS and XMPP. We actually already have such a technology in our labs called 'SyncStream'
This new model would, by necessity, push a lot of the work to the edge where aggregators would need to manage subscriptions, blocks and @ reply tracking. I think, however, that this is an opportunity rather than a problem.
The idea is discussed pretty thoroughly on the post so I wont rehash it here. It's a fascinating notion, one my team and I have been kicking around for more than a year.
I wonder if it will gain traction...