I was really impressed by the Sourceforge "P2P-Radio" project. It uses the same basic idea that PeerCast does, namely that people want to use their own media player and not a new radio tuner program. To that end, like PeerCast, P2P-Radio runs a miniature Shoutcast server on your own machine, which you then tune into with your regular media player. Since most every program can handle shoutcast (it's what Magnatune uses for its own radio broadcasting) this works well.
What P2P-Radio does better than PeerCast is twofold:
1) the broadcaster interface couldn't be simpler -- P2P-Radio acts as a Shoutcast repeater, simply downloading a live mp3 stream and rebroadcasting it via the P2P-Radio network. This means I can simultaneous run Shoutcast and P2P-Radio, from the same feed, with almost no effort. It also means I can use the excellent shoutcast-based broadcasting software. There's some fancy commercial DJ software that broadcasters can use, though I use the simple linux one, feeding it a text file playlist that my software generates.
2) the listener interface is very, very clean. All you give it is a tcp/ip address, and it launches your player and starts running.
In order to deploy this for Magnatune in a big way, I'd want to simplify the radio player further, so that it doesn't ask (at startup) whether the user is a listener or broadcaster. I would also want to provide a list of Magnatune stations they can pick from, rather than learning to copy/paste a tcp/ip address. Another possible way to deploy this would be embedding the java app into a web page, so that nothing needs to be downloaded. That would likely greatly help user acceptance.