Act I is now with our beta test team (Arj0n, Cat and Tabatha from the AGS boards) - all I know for sure so far is that they've found one typo. I'm sure that soon reports will flow in of weird and wonderful ways to break the games, impossible to foresee continuity errors, and the like.
Act II is, believe it or not, almost finished as well. We've decided to take a different tack that will basically involving adding new puzzles to the existing demo section rather than introducing a whole new section with its own unique game mechanics etc. While the idea was nice, this way we get to finish production of Act II quickly and ensure that people who've played the demo don't feel that they are playing exactly the same thing when they reach that part in the game.
Just waiting on Ben Chandler for the Act III graphics, and we'll start on the big finale. (Well, that's probably a job for August / September, but it feels like we're really making good progress atm.)