I've seen some definite progress, but also see he has a long way to go if he's going to get back to where he was.
Progress
1) His shooting consistency/accuracy is going up. Early on he could be accurate for a few jumpers then he'd be off for a game or two. But in the last week he's been hitting the jumper consistently without the long dry spells.
2) His one-leap vertical is getting higher. In the preseason a lot of his dunk attempts were ending up below the rim and he wasn't exploding up at all. As the weeks have passed, though, on any one jump he is getting up pretty high now as evidenced by that alley-oop between 2 players in Utah.
3) Offensive timing. Again seen most easily with the alley-oops, he's no longer back-rimming the misses and instead if he catches it above the rim it's a dunk.
Ways to go
1) Quick leaping: This one worries me a bit, because it also goes with age so there's no telling how much he'll get back. KG can get up high on a single leap, but when he has to get up quickly to grab a board or challenge a shot or win a jump ball he can't do it. Whether this comes back or not will tell whether or not he goes back to being a DPoY beast or remains just a very good defender.
2) Stamina: He still visibly wears down as the game goes along. In his last 2 games he is shooting something like 13-for-20 for 29 points in the first 3 quarters but 0-for-1 for 0 points in the 4th. Also, as others have pointed out he doesn't have the energy to operate out of the post as the game goes along...he does it a bit early now (wasn't much at all in the first week or 2), but Bibby the other night was a perfect example of him just not seeming to have the energy to finish in the paint late. The good thing is the stamina is getting better and should continue to do so.
In summary, I think he's worked a good bit of the initial rust off his game and is starting to get some athleticism back. But the lack of quick jumping worries me a bit, though one would naturally expect that to be the last to return so we'll see. Hopefully by the All Star Break he's closer to his normal self and these early worries seem silly.