In response to Marcia (SEW mod, old time WMWer) for getting booted from MSN Search or Live.com Search in a WebmasterWorld thread, MSNdude sheds some details of Live.com's handling issues of 301s.
The one place we know we need to work on is deciding which URL to associate with the site: in some cases it's the new one, but in others it's the original one. That's mostly a cosmetic issue, though.
So if you 301 redirect a domain to an other the site command may not return the correct URLs.
Forum discussion at WebmasterWorld.