I just stumbled upon a rather interesting article on InfoWorld Virtualization Report that outlines a method of using free software to provide virtualized desktops to end users.
2X
All in all it looks very appealing, but you will need to run a pretty powerfull server, or even servers, if you want to virtualize dozens of desktop machines on it. I wish 2X had given some kind of indication on what hardware they envision this solution running on, and not just "Hardware specification, will depend on the number of virtual machines you intend to run.". I'm sure they could have given a baseline for Windows XP with Office 2003 and a few other fairly standard office applications. The best thing here is that license costs of the solution is down to the base client OS licenses and any applications that might be needed inside the virtualized desktops, as you could run the VMware Server and the 2X ThinClientServer solution on Linux.
I'll definately need to setup a test lab for this real soon.