I wish you good luck with that. I know Anet is pretty low level so you have the burdain of making all 'smoothing' functions yourself. Like you said there are immense tricks for doing that and you'll need to utilize all of them for a game that needs the precision of an FPS to be playable. Just slapping a Dead reckoning algorithm won't work. I've read so many reviews of AAA game developers where they state that most effort has been made into making the networking work stable and smoothly.

I'd love to try that germanonkul's demo if it's available for download somewhere..