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I even have my brother-in-law who works for NVidia who says the issue is not inventory related but SW related. That's all I know... i have no idea what that means.
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This is the only bit of your post that makes sense.
What it means is that Nvidia's engineers are in the process of writing, de-bugging, testing, re-writing and submitting code for approval in order to allow a second version of the 8800GT (Mac edition) card to run in an original Mac Pro. It's the software on the card that needs writing to support 32 bit EFI, not the drivers in 10.5.2. and the job will be done when it's done!
Is there a reason that so many people think that the holdup on the 8800 is 10.5.2? I mean, is there anything behind that or is it just speculation?
No. There is no reason. People are working themselves into a stupor just on the basis of speculation. I wish it were otherwise as I was one of the first to order an 8800GT for my "more mature" Mac Pro and one of the last to cancel in disappointment.
Do we know what 10.5.2 gets us in terms of making use of the new mac pro hardware?
No, but it'll most likely be nothing more than the same bug-fixes everyone else is getting. There may be improved drivers but it's not guaranteed.