We plan to remove our proprietary MNet subsystem from Moodle 2.3 (planned for release in over a year, June 2012 ). It causes us constant problems, is not well-defined, and only implemented by very few other systems.
We plan to redesign the functionality completely, replacing it with standard web service functions, standard protocols and probably standard authentication schemes like OAuth 2.0.
We want to work with the Mahara developers (and anyone else who may be using Mnet) to ensure a smooth changeover, but it's unlikely that the new system can be directly backward-compatible with MNet.
This means that if you use MNet in a significant way, you need to upgrade all your networked systems at the same time and reconfigure the networking.
At this stage the design for the new systems is not defined at all. My own thinking is that we should think holistically about how Moodle can share authentication and the old MNet services with all kinds of other systems, not just Mahara. If you have any ideas on what we should do and how, then now would be a good time to start brainstorming!