I wouldn't be surprised to see Software go away in DNF. It's a real hassle to add things that look cool in hardware then have to deal with the software version ramifications of that. We had decided to go hardware only way back in the early days with Prey, so it woulnd't be outside the realm of possibility that we go hardware with Duke.
The bottom line is that is software looks "ok" and won't cost us weeks of extra development time to keep it current with the hardware version, it can stay. But as of right now, we've all but abandonned software mode and have the attitude that hardware is the priority.
The reality is that no system ships now without a 3D accelerator. Added to that will be a flood of Voodoo 2 level cards on the market as new hardware ships. And once everyone can have 3D acceleration for under $100, it becomes the same issue as a sound card. Just go buy one.