Over the weekend, the Russian Army cleared South Ossetia (and apparently Abkhazia) of Georgian troops. The air campaign that the Russian Air Force started on Friday continues, with reports of air strikes all over Georgia. The Russians have bombed the Baku-Tbilisi-Ceyhan pipeline, which carries Central Asian oil through Georgia to Turkey. There is no indication that the pipeline has been hit, and it would be easy to repair in any case. The Russian Navy is patrolling off Georgia, having delivered troops to Abkhazia and sunk a Georgian missile boat.
The spot to watch now is the Georgian city of Gori. The Georgian Army is dug in around Gori, which is 17 miles south of Tskhinvali, the capitol of South Ossetia. Gori has been subjected to an artillery bombardment, and reportedly to direct fire attacks by Russian tanks. How the Russians proceed in Gori will provide an important clue as to their larger intentions in the war. Right now the Russians control all disputed territory, but destroying the Georgian Army in Gori would cripple Georgian capabilities for the foreseeable future.
Gori also sits on the road to Tblisi, although the 50 miles between Gori and Tblisi are over difficult terrain. Fox News is reporting that a "a senior general says Russia has no plans to move its troops from Georgia's two breakaway provinces into Georgian-controlled territory," but it appears that Russian forces have already moved beyond the borders of South Ossetia. Another area to keep an eye on is Abkhazia, where the Russians have built up forces, possibly in anticipation of opening a second front against the Georgians. If you have access to Google Earth, I recommend taking a look at the geography of the region; it will give a better sense of the moves the two players are capable of making.
International mediation efforts continue. The Georgians have unilaterally declared and signed a cease fire agreement, but the Russians are stalling. US and other Western efforts in the UN Security Council have had a limited effect. 2000 Georgian troops that had been stationed in Iraq are being flown back to Georgia by the United States.