This doesn't solve the "global graph" problem. It's basically just an open source Ning clone.

Can the interface be used as a front end to what Diaspora builds?

I think the issue here is that Elgg doesn't solve the "distributed" problem. Without that, you cannot migrate billions of Facebook users to a single Elgg install.

Billions? You mean Millions right?

Elgg can be hacked into a distributed Facebook but last time I played with their source, which was about a year ago...well...let's just say that is a jungle meant for the bravest of explorers.

Same experience here. Had to integrate Elgg into another system, and the code pretty much turned me off PHP forever.