Developers are only testing iTunes for the iCloud features.... it's a moot point which version developers currently have, as normally you don't get an advanced copy of an iTunes update.
10.4 is probably more of what iTunes 11 would be without iCloud. It was a total re-write of the app, and I think that's the killer thing about. I don't think we'd of seen that released if it wasn't for wanting to make the iCloud launch smooth and not risk issues. This gives them time to work out kinks (because iTunes is usually fixed based on user feedback, not in a developer preview for a web feature.)
While I don't think iTunes 11 is going to be anything really knew, I wish it would be. It's grate they re-wrote the app to be 64 bit cocoa for Lion, but iTunes is a pile of bloated crap.
They really need to work on making is a better media player instead of constantly focusing on the stores element of it. They need to make iTunes do a better job with larger libraries, make it more responsive, and make random mode actually be more random. iTunes gets no love in the world as a media player. Spotify does a better job and I've kind of quit using iTunes unless I want to buy something.