My 2 cents:
I bought AU to both port it into our FR group and maybe as a long-term goal start a DT campaign.
I'm really happy with the book, though the races took a while to warm up to.
However, I also feel that the claims of compatibility were a little extensive, maybe even deliberately vague. I don't think AU is incompatible with standard D&D, but I think it is a little more work than I - reasonably - hoped for.
However, AU imo is compatible with D&D, because their mechanics intermesh flawlessly. I think you could have both spellcsting systems side by side, even though I feel it would be a little redundant. In low levels, the AU casters would be better than the D&D casters, no doubt, because their flexibility weighs in stronger when the casters only have few and low-power spells.
In higher levels, however, I think D&D casters pack more punch, so strictly combat-speaking they would probably be stronger than AU casters.
I also think that the "semi-casters" are better than D&D's (Bard, Paladin, Ranger) because they get access to more and higher level spells - but I don't think they'd overshadow their counterparts totally, other than classes sharing the same job and may one being redundant (paladin or champion, Unfetters or Rogue, Magister or Wizard/Sorcerer, Greenbond or Druid, ...).
So, the system imo is compatible, but to me, the work needed to import classes, races, etc. would be too much for the result, especially when it would lead to having redundant classes.
I can emphasize with people who only bought AU for porting over parts of it now being a little miffed at the unexpected extra-work. I can't agree with claims of AU being incompatible.
I also noticed the - imo - regrettable trend of people defending AU in the first days instaed of reall listening to the complaints/questions first. It is understandable, though. AU was greatly anticipated, and being able to playtest it and see it before others is partly responsible for that; the people - especially the CoM - clearly love the game and were expecting others to love it with the same passion. So early complaints were especially jarring, and they tried to find a reason for people to get over their complaints and start loving AU. It's only natural. Imagine having a son starting to play junior league, and you know he's a really good player, and you have learned not to notice his lack of team spirit because it's your son, and in the first game of the season he accidentally collides with the pitcher, and another parent asks you whether you haven't taught your son any social skills. You get defensive.
This trend has nearly disappeared, however.
Last, AU is a game like others. If you expect something out of a product - however reasonable these expectations may be - and it doesn't deliver or isn't really to your taste, you regret having spent the money. Perhaps you also get a little angry. More, the things you don't like likely jump into your face whenever you think about the product as a whole.
Perhaps you don't like the implied setting. Then everytime you think of a race, the flavor of the setting is invariably in your mind and not excisable from the pure mechanics, because naturally, races get their mechanics due to their personality and place in the world, which is influenced by the setting.
With standard D&D, these implied characteristics are traditionally existant, and you don't really see them as such. However, dwarves are thought to live under the earth and fight against orcs and goblins; elves are meant to live in forests; half-elves are meant to be well-respected (in 3.5) while half-orcs are viewed as somewhat crude; elves and dwarves don't like each other, and halflings were jovial and rural and are now nomadic and adventurous. except for the elf/dwarf issue, all these implications are expressed in game mechanics; still, a lot of worlds use these races slightly differently, sometimes even without changing their modifiers. Even favored classes are an expression of implying a certain setting, where elves are not rogues, dwarves don't become wizards, and halflings only seldomly take up a calling as a monk.
AU is new, and it's races, while not original, weren't really available as standard player races. Therefore, every detail of their description and mechanics is regarded as new and inseperable from the whole. In the end, each implied characteristic is as easily changed as in D&D; due to the fact that AU races generally have less such characteristics, I would even say the overall change is easier.
This is not really important, however, because standard D&D races needn't be changed to work with a standard D&D campaign, while AU races likely will have to be. However, I feel it is unreasonable despite any and all statements to the contrary to expect it being possible to import any new race into a D&D campaign without a certain amount of work, whether these races stem from the Kalamar Player's Guide, Mythic Races or AU. I don't think this work must necessarily be extensive, but it can be depending on how deeply your campaign integrates each race. Even FR races need work to be imported; however, since the implied setting is meant to work with both the FR and the standard races, this work has already been done by the designers. AU isn't meant to be played with elves and dwarves, so you'll have to do it. The fact that it can be as easy as "The verrik live here" shows the compatibility of the system.
You could easily import Sibeccai (for example) into every campaign while keeping their feelings of insecurity (change it to elves, wizards, dragons, whatever) or getting rid of it (just don't use it, there's no mechanic for it).
Most of the debated points here can be traced back to a matter of personal taste, which is fine, but are presented as the views of a majority or even as undebatable fact, which isn't. I think BryonD won't be happy with AU for personal reasons; to him, the flavor of the races is not easily seperated from the mechanics. Even though I feel otherwise, I can't change his opinion without forcing him to sit down and try seperating it, which would be quite silly.
I'm happy with AU, and he's not, and that's that. Let's trash the recent issue of Dragon together.