I'm happy to announce a minor change to the API that should have a major impact on the Twitter community. The /statuses/update method now takes an optional parameter: in_reply_to_status_id. As you might guess, this allows API clients to specify which status a status to be posted is in reply to, rather than our system assuming that it's in reply to the last message posted by the user specified by "@username".
If your client posts statuses, please consider making use of this feature. By convention, we'd like to continue to use "@username" at the beginning of messages that are replies, but specifying the in_reply_to_status_id parameter will override the guess about the in_reply_to_status_id attribute that our system makes. Yes, this does mean that you could post a message that appears to be a reply to Alice while it's actually a reply to Bob; that's fine, as I'm sure there's a use case for it out there.
As was noted by several commenters on the various write-ups around the web, this is going to be particularly tricky to code on the API application side, and likely wasn't too terribly difficult for Twitter to implement.
There are a few implications being bandied about, some of which I can agree with, and others I think are simply wishful thinking. Rob Diana and Jesse Stay both suggest that this might mean an end to the @username reply convention, eventually. I would tend to disagree with that analysis, since there will exist a number of places (both on the Twitter website as well as a number of third party applications) that won't be able to ever take advantage of threading (I'm particularly thinking of the XMPP stream, if that ever gets returned to functionality).
Perhaps a bit of wishful thinking advanced by Rob and Jesse is the thought that this could lead to a federated system for Twitter, along the lines of what identi.ca currently offers. That, also, is a particularly long shot speculation, and given the context of the announcement and the fact that this code change puts most of the burden of work on developers not employed by Twitter, I'd rather doubt that this is in the works any time soon (though I'd love to be proven wrong on that).