Great stuff, we are using it extensively!!
For one of our implementations on MOSS 2007 (with JQUERY 1.4.2 and SPSERVICES 0.5.6) we have a cascaded dropdown on 3 levels.
If the users enters a custom value in one of the dropdown fields and tries to save, he gets the "Value is not among the set of valid lookup values".
That is the way we like it!
However, when we try on SP2010 (with JQUERY1.7 and SPSERVICES 0.7) we don't get an error message. It just fills in a blank value on that field.
Any ideas ? Was that functionality suspended ?