Doesn't really look like they've done a huge amount other than write a sketch that makes the arduino emulate the Picoboard interface board you can get for Scratch. From what I could see, there's a lot of work still needing to be done to make a proper Scratch interface for the 'duino.
Technically speaking, it can't 'program' an Arduino as you need to upload a sketch to your board in order for it to be recognised by the editor. (This is what is used to emulate the Picoboard.)
At the moment, the editor only supports 6 analog and 2 digital I/O pins. Also, there doesn't seem to have been much effort made to remove functions from the libraries that don't pertain to hardware interfacing, with many of the original Scratch functions still evident.
I know that this is probably still early days with this project and what they've done isn't too bad I suppose, but to make this a serious contender for Modkit, it needs a heck of a lot more spit and polish.