The Bazaar distributed source control system has some Google Summer Of Code Projects. One of which is the Visual Studio integration and recently there has been a status update on the mailing list talking about progress - read it here.
I think the distributed source control system that catches on will probably be the one which manages to get together the best external tools and UI. Bazaar seems to have a few projects that are actively developed that could deal with that and make it quite a contender.
Part of the development for this project though is wrapping the API in a Microsoft embeddable way. An interesting approach but I can think of a few other routes.