I made some big updates to the plugin ... really, I removed most of the code. A good part of the plugin was trying to fix some things I saw wrong with how WPMU was working that now seem to work fine. In any case, see this blog post:
http://labs.creativecommons.org/2008/07/01/per-blog-registrations-for-wordpress-mu/
I'm not sure how to get around the issue that fulvio mentions in the previous post. The only thing that comes to mind is to add some text to the registration form letting the user know that if they already have an account with that install of WPMU then to just use that, though the user may not have any idea they already have an account (especially with subdomains).
I guess the plugin could also be smart enough to catch the submitted name and email, check to see if one of them already exits, and if so then give the user a useful message about how they've already got an account and with what blog.
Any questions or suggestions, please write me at nkinkade@creativecommons.org.