Congratulations on getting this far in the Google Summer of Code. You have two great mentors, so I have high expectations for this functionality . Seriously though: if this is done right it will save many people many hours of work.
I have a couple comments:
1. Where are you planning to put the boundaries when it comes to which settings can be saved/imported/exported. Are you planning to include all role related settings (yes, please!)? Would it include language files (not likely, but think about the added value it could have...)
2. It would be great to also get access to a viewable representation of the settings file (like a printable PDF or a nicely styles HTML file). This could be used to document the chosen settings
3. An easy way to make a diff between two setting files would be excellent. Imagine this. We configure a Moodle installation a particular way for a client and export their settings. The clients then continues to use the environment and changes some settings, eventually leading to something not working. It would then be trivial to see what changes were made, pointing us in the right direction.
4. I am not sure I see the value in having multiple settings files. Shouldn't a setting file be an integral thing? That way you can allay some of Olli's worries and it would make things more simple. You can export you current settings to an XML file and you can import settings from an XML file. An import should make your Moodle identically configured to the Moodle from which the import file was exported. Otherwise it will get confusing.
I would be willing to try out any early releases that you might create and give my feedback.