All,
I've completed a part-time 9 month project to write a utility called "SQL Server PowerShell Extensions (SQLPSX) which uses SMO, PowerShell, and SSRS to produce permissions/security reports including effective permissions by enumerating nested Windows AD/local and SQL Server roles. SQLPSX can be scheduled to run in batch mode and loads the collected security information into a database for reporting and analysis. Check it out on my CodePlex project site.