I have finally finished my work on a threaded comment system for Elgg 1.2. You can download the plugin at http://community.elgg.org/pg/plugins/rsrobbins/read/228544/threaded-blog-comments This must completely replace the existing blog plugin because the change from an annotation comment to an ElggObject comment is more extensive than a view can handle. But I tried to follow the Elgg way of doing things as much as possible.
The Threaded Blog Comments plugin allows you to reply to a specific blog comment so you can create comment threads without using some hack like the @ ampersand sign (made popular by Twitter). A comment that is a reply to a previous comment will appear underneath and indented. This makes it much easier to have a conversation in the comments. In addition to the nesting of comments, I also added pagination controls for comments which was not a feature of the original comment system.
Much of this work is based on the similar customization I did for Ning before they killed their platform for third party developers. And prior to that I developed this style of nested comments for YouTube videos using the YouTube API which you can see at http://www.williamsportwebdeveloper.com/YouComment.aspx. The legacy of this prior work is that the Elgg version still uses a XML feed. So you also get a RSS feed for a blog’s comments as a bonus.
If I don’t go back to work any time soon, I’ll work on applying this customization to Elgg 1.5. I will also see about implementing nested comments for other types of content besides blogs.