Luke Hutchison (note to people trying to recruit him for jobs… that is Hutchison, not Hutchinson) has done some tremendous work moving things forward by both explaining the limitations of multitouch and also laying the groundwork for a clever hack to enable basic operations such as two-finger zooming in normal android applications.

You can see his post about the multitouch g1 browser, or watch the video here: (which has a nice catchy tune behind it)
Multitouch zooming on the G1

Two-finger zooming in the browser is a major feature that up until now is only present on the iPhone. As of today, this feature can now be present on anyone’s G1. (So, for those keeping score… the G1 has copy & paste, MMS, and now if you want – a browser you can zoom with using gestures)

In order to apply this to your phone, you will need to get root access to your phone. The best instructions for this are found on the unofficial android wiki. (It is worth noting that once you do this, you will no longer receive updates from T-mobile… but given the fact that any update from T-mobile would almost certainly NOT include this multitouch version of the browser [even though they could easily include it for the G1 since the code is all released])

I’ve been using this for a day or two and it’s nice. Technique is important – you need to be aware that it wont really know what to do with your fingers if you get them too close – so don’t start your zoom motion with both fingers touching and expect it to work well – keep them about an inch or an inch-and-a-half apart at the minimum and it works pretty well.

There is also an option (turned off by default) added to the browser to enable autorotate in the browser. Both of those together are nice.

Go get your files at the xda forums or on the android-dls forums