Thanks to Kaseyart and Rock4christ for sending this in. It seems that Gizmodo has gotten their hands on a developer demo showing this. This could be a 3rd party hack in the works or maybe something being worked on for a future patch or release. BTW, aren't we due for a patch soon?

zunesmartshuffy 

At Microsoft's Techfest, a researcher was showing off a smart shuffle system that uses tags and meta data like tempo and genre to direct playlist creation in a portable music device. The demo was being done on a first generation Zune.

The system is being developed in direct response to the huge number of songs people carry around on their media players, and specifically the millions of songs a Zune library can stock using a Zune pass. The system automatically recommends new songs based on songs played, and the logic is continuously "steered" by voting tracks up and down.

Source: Gizmodo