Here is a photo of the almost finished pallet building (looks like a barn rather than a house) in Arkansas. Pardon the photo I snapped it on the fly. It is coming along nicely since I last saw it.
An individual in N. Central Arkansas is constructing a small home (maybe 600 sq./ft) using reclaimed pallets. I've only seen it in passing from the highway but it appears to be quite well constructed. It sounds (looks) like a good idea to me.