Although, I'm not seeing how this fits in with OpenID or OAuth.
Imagine signing into a site with your OpenID and actions being sent back to your hosted DSNP profile Facebook Connect style.
Does that mean "applications" are exclusive to users of an identity server?
How would 3rd party applications fit in?
Some networks are starting to offer embeddable forum- or comment-like behaviour - can this protocol accomodate that?
Is it flexible enough to support other (yet to be invented) uses?
So I'm optimistic that your distributed singing sessions (e.g.) could use the DSNP infrastructure.
That's true with DSNP, but given current p2p technology it should be possible to create a social networking application without data on servers. Where is my Facebook-on-XMPP desktop application?
However, the cryptography in the source code (encrypt.cpp) seems to be hand-made from RSA, SHA1 and RC4 primitives. While I haven't checked details like how they choose their RC4 IVs, I wouldn't trust mortals to get a crypto protocol with PKI right the first time.