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In an ideal world the would be no need for Java being the middle-man.Not possible, ideal world or not.
Programming languages have different type-systems. First of all you can't have the VM optimize for all of them, so the priority is always the primary language (Java for the JVM, or C# for .NET).
The second problem is that those type-systems have behaviors defined either at compile-time, or at runtime.
For instance, in Haskell a method is resolved / specialized on the use-site (based on the arguments provided) at compile-time, since by design, all types are known. If you call that same method from Java, you can't use the same interface ... you'll probably call a proxy, that based on the types provided (at runtime this time) it would find the right method and call it (with a call-site cache to optimize future calls).
Another example ... Common Lisp has multi-dispatching. It makes sense for Lisp, but not so much for Ruby. And Java has single-dispatching too. Simulating multi-dispatching on top of the JVM is not easy (it will be easier with invokedynamic and MethodHandles) ... and even if some kind of multi-dispatching was implemented, which one? Asymmetric or symmetric?
The only way to communicate with a language efficiently is trough the standardization of a MOP. But that's also hard to define because of the same reasons ... the author of IronScheme for example was considering dropping support for the DLR because it wasn't a good match.
Progress is going slowly since every
That project was founded in 2007. The last release is from 2008. Has anybody ever adopted it?
If you'll look at the repository, there are regular commits. I'm following the "JVM languages" google group, and the author is communicating regularly with people like John Rose (JVM / invokedynamic) and Charles Oliver Nutter (JRuby) among others, getting feedback, providing feedback, and Charles even attempted an integration of JRuby at some point. I don't really know the state of that.
In the case of such a project you have to please everyone, being a complicated matter from both a political and technical point of view.
If you are truly interested in such things, you can always scratch your own itch ;)