Mike,
The plan is definitely to have an offline ability. Though there are certain things that just don't make sense offline. I don't want each phone carrying around the entire revtk database so things like stories, etc will all be transient. (Cached for the lifetime of the running application)
But reviews, adding cards, removing, etc should all work without the site. You'll have to sync it up with the site though if you want the changes reflected on the main site (of course).
For the Kanji -> Story, I'll have to think about it. It's definitely doable but I vaguely remember something about this from the Reviewing the Kanji preface.
But should it not prove too difficult, I'll add it. The only thing is, would you want that on a 'separate review stack' or would it be the same as remembering the keyword->kanji? And the card is marked as 'remembered', regardless of which direction.
John