Yes, this means that <y> is now a vowel. Specifically, a compressed (semi-rounded) central close vowel. Orthography and phonology have been in flux recently. I've reluctantly dropped <rh>, for various reasons: differentiating between two rhotics is a bit tough; the approximant is probably easier in clusters, but letter groups like <drh> are awkward and don't look right for the language, and the alternatives of neutralizing the /ɹ/-/ɾ/ distinction in clusters or swapping the spellings around would just get confusing; and it turns out that <rh> isn't an "Irish-like" spelling at all, but rather Welsh and Greek (this is not so important, but the others are deal-breakers). On the other hand, I'm trying to find a use for <bh>, which does look appropriate, but I've already got <v> for /v/; I'm vaguely leaning towards using it for /w/, like Irish Gaelic, but I'm not totally sold yet. Not sure how I want to spell /j/: <j> is already taken (/ʤ/, under the Naïve Anglophone Won't Mangle It principle), but I also don't want <y> to do double duty as vowel and consonant.
Still not settled on how I want to use diacritics.
Prosody has gotten some attention. Syllables can be light (one mora), heavy (two morae), or superheavy (three morae): a short vowel is one mora, a long vowel or diphthong is two, and a consonantal coda adds one (whether a single consonant or cluster); an onset consonant or consonant cluster has no effect on syllable weight. Current thinking is that stress falls on the syllable containing the third mora from the end. In other words: if the last two syllables are light, the antepenult is stressed; if the final syllable is heavy, or the penult is heavy or superheavy, stress falls on the penult; if the final syllable is superheavy, it takes the stress. This rule is actually the same as Latin, except that there are no superheavy syllables in Latin. The only problem I have with this is that I've gotten used to the name "Ilion" having a stressed first sylable, but this would mean that stress would actually fall on "io" if it's a diphthong or "i" if the vowels are in hiatus. Bumping it up to fourth-mora-from-the-end would mean that the final syllable couldn't take stress, though. And I want stress to be regular. It's frustrating.