Overview
With the abundance of distributions, and the burden and confusion that too much choice can cause, that is a very appropriate question :) The main purpose of Kiwi is promoting free software among users to whom even switching to Ubuntu is a challenge. The modifications included, which for various reasons are not on the Ubuntu CD, aim to overcome the main obstacles that we have seen novice users bump into while trying Ubuntu, such as lack of local language support on the CD, inability to easily connect to some ISP's networks and missing multimedia features out of the box. As such, with limited effort and a small amount of nonintrusive changes Kiwi is an easier to set up Ubuntu system. Switching between Kiwi and Ubuntu is simply a matter of adding or removing the extra apt sources Kiwi uses.
It seemed like a sweet and easy to remember name, and from a certain distance, in adverse lighting conditions, the cross-section of a kiwi fruit looks like the Ubuntu logo. So it was an obvious choice even if in hindsight, it was not the most fortunate one as it caused a bit of confusion regarding the distribution's country of origin. It may imply that it is a Kiwi (from New Zealand) distro. FWIW there are also a few other software projects named Kiwi, the most popular being SUSE's derivative distro builder tool.
Details
No, and it never will. All changes are done via the package system by installing existing unmodified packages from the official archives and slightly modified or new packages from an extra archive.
Ubuntu 'remix' derivatives are required to only use software available in the official repos. With the use of some packages that do not qualify (speedtouch, libdvdcss2), as much as I would have liked calling it Ubuntu Eastern European (or whatever) edition, it is not a fair use of the Ubuntu trademark.
In the spirit of minimal and mostly functional changes, the artwork is almost identical to Ubuntu's. Among the few places that were changed are the usplash logo and the login greeter screen. This way the difference is clear and Ubuntu does not get undeserved criticism in the unlikely case of a Kiwi-only major SNAFU, but the overall feel is familiar to those already used to Ubuntu.
Kiwi closely follows Ubuntu's release schedule. This means there's a new version every six months. In addition there may be intermediary releases based on the latest Ubuntu with package updates and Kiwi specific polishing included.
As for Ubuntu, the version number reflects the year and the month of release. The stable release of Ubuntu on which a specific Kiwi release is based on is the largest Ubuntu version number less than or equal to the Kiwi one. For example both Kiwi 7.04 and 7.08 were based on Ubuntu 7.04, and both Kiwi 7.10 and 8.03 on Ubuntu 7.10.
As of 8.04, Kiwi is for i386, Desktop CD only and Ubuntu/GNOME based.
The regular Ubuntu repositories are used and in addition a small repository at http://kiwilinux.org, which contains packages not in the Ubuntu archives, or modifications to a handful of existing ones. The Medibuntu repositories are added as well. Our changes are carried in Launchpad in the Kiwi team's Personal Package Archive.
The main difference between Ubuntu and Kiwi is the default package selection and the addition of these package repositories:
deb http://kiwilinux.org/archive hardy main #Kiwilinux
deb-src http://kiwilinux.org/archive hardy main #Kiwilinux
deb http://packages.medibuntu.org/ hardy free non-free #Medibuntu
deb-src http://packages.medibuntu.org/ hardy free non-free #Medibuntu
Install this package on Ubuntu 8.04 to set up the Kiwi and Medibuntu APT sources and GPG keys :
http://kiwilinux.org/archive/pool/main/k/kiwilinux-desktop/kiwilinux-settings_8.04-2_all.deb
As of 8.04, full language support for English, Romanian and Hungarian are included on the CD. French and German translations are also there but not the full support with OpenOffice and Firefox l10n. Those are available from the archives as for Ubuntu.
The default mail client is Mozilla Thunderbird, the audio player is Audacious. The restricted GStreamer plugins, encrypted DVD support and Adobe Flash are installed by default. There is a GRUB menu restoration GUI on the LiveCD. To make space for the additions Asian fonts and input methods are removed. A different usplash artwork and Midnight Commander are some of the other extra bits.
Contributing
If you're contributing to Ubuntu you are contributing to Kiwi and vice versa.Here's an initial set of Kiwi graphics.
Kiwi was started by Ubuntu core developer Jani Monoses, and received several contributions in the form of patches, packaging, artwork, hosting facilities from members of the Software Freedom Group of Cluj, Romania and others.
To Launchpad on the specific package you think is buggy, just as for Ubuntu.