About the Release
Silverlight 2 Release Candidate 0 is intended for developers so that they can update their existing SL2 Beta applications to work with SL2.  It is important to upgrade your development environment to SL2RC0 so that your SL application will work the day SL2 is officially released.  Some highlights that I found interesting in this new version is 3 new controls: ComboBox, ProgressBar, and the PasswordBox.  There's also some new control skins available.  Scott Guthrie has a nice overview of the new features and gives a great overview of SL2RC0 here.  It also looks like we can now inherit directly from DependencyObject again!  We can also set default values for custom dependency properties using PropertyMetadata.

What should I do?
As a developer, you'll want to download and install the updates. 

Here are the important downloads:

Before you begin, ensure you have Visual Studio 2008 SP1 installed.  If you already had the Expression Blend 2 June Preview installed, you'll need to uninstall it first.  Second, install the new Tools for VS 2008 SP1.  Finally, install the MS Expression Blend 2 SP1 Preview.

After you have installed the updates, you'll want to open your SL application and test/debug/update it to work with the new SL2RC0 version.  You will NOT want to deploy it.  This version is intended for developers only.

Issues I Ran Into
The strangest issue I had was a weird bug when I tried to compile my SL application.  "The 'ValidateXaml' task failed unexpectedly."  I found several articles on this error, however simply cleaning the solution and rebuilding it resolved the issue.  The main issue I ran into was the fact that I didn't initially see the Expression Blend update.  Therefore I couldn't use Expression Blend from within VS.  That was a I-D-1-0-T error on my part.