For those that are avoiding WPD, with the 3.0 version of Wordpress they finally integrated WPMU with Wordpress, so now multisite functionality is available.
The main feature of course is controling updates and other aspects of site maintenance, across the entire network of sites you run, from ONE place.
The downside? If a competitor finds one of your sites, they'll find all of them (and therefore the niches you are targeting), because of course they all run off the same IP. Is there a way around this?
The only hassle being fiddling around with DNS settings, but other than that, pretty straightforward stuff. Just a warning, if you do this, do it on your test sites first, or at least backup everything beforehand!
I was actually going to start looking into this possibility once the Challenge was over, but since you brought it up I may as well read up on it.
I don't understand the thinking behind the downside though. Even if you used WPD to setup a site, the site is still on your host and unless you get a new host for every website I'm going to assume that at least a few of your sites are going to be sitting on the same box. Which, in most cases, is a shared account anyway meaning there are sites on there that aren't even yours. So perhaps I'm over looking something?
Is there a way around running sites on the same box off of the same IP? Yes, you can map each site to a different IP address and run it that way. Its not a simple set-up, nor would it be cheap by anyones standards. I also highly doubt any host would do it for you and you would need to set up your own server to accomplish that. I don't think the end result would really be worth the privacy of your niches though.