Back at the last WordCamp Atlanta (Jan 2010), I heard Jane Wells and some of the core devs discussing the possibility of ditching the Link Manager, and replacing it with something based on Custom Post Types. Shortly after, the Menu system was added, so I figured that must have been what developed from that discussion. And I was surprised that we hadn't seen some sort of conversion tool to convert Link Manager data into Menus.

But I'm thinking it's still possible that the old Link Manager could remain in the system and evolve as mentioned here. Moving links out of separate tables and leveraging all the CPT functionality would certainly open things up to some interesting possibilities. All it needs is a slick and friendly UI, and a conversion tool, and we'd be good to go. Such a move might break a few plugins that interact with the links system, but probably if they were doing some sort of end-run around the API and dealing with the db tables directly.