Developed by ibiblio.org, Lyceum is a stand-alone mutli-user blogging application, designed for the enterprise. Utilizing the fantastic, intuitive WordPress blogging engine at its core, Lyceum enables stand-alone, multi-user blog services for small and high-volume environments. Lyceum is GPL-licensed, under active development, and free to use (source)
Err, but how about the WordPress-MU project?
The main difference between Lyceum and MU is the database schema. MU creates a set of tables for each blog in a system. Lyceum uses a fixed number of tables for the entire system. Another difference is that in Lyceum, each blog can turn (pre-aproved, admin-installed) plugins on and off as they like. We’ve also made a smattering of security and performance improvements to WordPress (some of which may or may not be applicable to the MU architecture) (source)
I have yet to install it, but this looks a lot easier to manage than WPMU, and the user interface is updated to the pretty WP 2.0 blue hues.
However, do note that Lyceum is much like WordPress MU, and to some extent, the Livejournal code, since its designed to be deployed to an X number of users, and not exactly for one user to publish a number of blogs using one CMS.