I'm very glad to see a muscle system being built for blender. My method for doing muscle sims in blender as of now is by using a ridiculous amount of shape keys, and in addition to taking forever to set up, it also leads to huge .blend files.
Here is what I would love to see in a muscle system setup:
-Make the skin slide over the muscles, in much the same way flesh does in real life. Pull back the sleeve on your shirt and move your arm around. See the deformations in your shoulder?
-Some way to handle fatty tissue, and define how fatty each area is.
-Some way of addressing bones, and their affect on the skin. Not armature bones, but real bones; such as the shoulder blades, joints, etc.
-Some way of handling bounciness on sudden stops or impact. I handle this now using yet more shape keys, but it would be nice to have it somehow be part of the muscle system. (less important, because this effect is already pretty easy to achieve manually with shape keys)
-Areas that are not affected by the muscle system, such as the face; unless it can be demonstrated that such a system would yield better results or save time.
It wouldn't bother me too much to spend a great deal of time setting up the rig, it already takes me quite some time to set up each character. What I'm really after is a method that will yield much better results than what I'm getting now, and make everything as automatic as possible. Are the features on my list possible under the muscle system you're planning, especially the first one? (sliding skin)