The new menu feature in WP 3.0 works great now with Atahualpa 3.5.3. Thanks for this update!
There is some styling issue in the new "menu widget" though: sub-menus (second level) are styled "ugly", (i.e. NOT as in the pages widget). There's the "bar" for the first level and the "bar" for the second level which looks strange ... I hope you know what I mean.