At no.wp I made a notification system, and there was one very interesting lesson learned. Those who used the system got comments about their presence in every discussion. Over time it seemed to polarize the community and escalating trends in the community. I'm not sure exactly why this happened, but it could seem like those users using the system outrun other users and the later got frustrated. People were used to hang around a long time before posting replies and didn't realize that other users got instant warnings about upcoming discussions.
The expected behavior is not the polarization of discussions, rather the system (ie the on-going dialogue ) as a whole should be become more stable when the delay between interactions goes down. That was the idea. The frustration could come from some people (myself was one of them) outrun other people, that is people experiencing different delay and because they were used to be the first one to comment on a thread the feeling of power was shifted.
The system is pretty simple. The watchlist is polled from m time to time to see if anything interesting shows up, and if so warns the user. If the user visits a page it will also be put on a temporary watchlist. If something goes in the RC-feed then a notification is shown in the lower right corner of the window, and after a short delay is removed again. This happens independent of loading of other pages, but unloading a page can interrupt an on-going notification that will not be repeated after the next load. If redesigned it should probably use session storage instead of cookies, and it should probably try to resume interrupted notifications. It is also possible to load the watchlist only once and store it in the session storage to avoid polling the watch list feed continuously.
The gadget is still available, but I don't know if anyone use it anymore.
See also User:Jeblad/Notifications