It has only two levels, and it could look a bit better, I think. But it is ok. It is activated if you have embedded comment form and full blog feeds enabled. When activated, other comment hacks, like my threaded commenting, don't work.
If you want my threaded commenting back on your blog, you can switch comment form to "full page" or "popup", instead of "embedded", in blog settings.
I will write some posts about how to enable this new feature on modded templates, how to disable it by editing the template (so you can switch back to embedded form without Blogger threading), etc. I'll get back after little more investigating. Stay tuned.