Update: This version of Swype is for a trial. My trial just expired about 20 days after I installed Swype.

Text input on the G1 and most Android devices has been severely lagging the iPhone for a while now, but that's all changing. Tonight I stayed up much later than I should have playing with Swype after I found out how to install it on my G1.

As the name implies, to input text, all you have to do is swipe your finger around, lifting it for spaces (demo here). Swype seems pretty mature from what I've seen so far, and it has nice gestures built in for dealing with edge cases you encounter while typing: capitalizing, adding words to the dictionary, punctuation, contractions, going back and fixing mistakes, etc. 

I'll cut to the chase. Here's how to install Swype on your G1. It's currently not in the app market, so you're going to have to download an APK (Android Package) and install it.

1. Download Swype to your G1 (pardon the popups)
2. After the APK downloads, select the file to open it. You will probably receive a warning about an "unknown source" because you downloaded the app outside of the market. Go to "Settings" => "Applications" => and put a check mark on "Unknown sources". Then go back to your downloads, and select the file again.
3. Be patient as the installer launches, it takes a few seconds. Install the application.
4. Time to enable Swype. Go to "Settings" => "Locale & text" => and put a check mark on "Swype".
5. Try to Swype tutorial. Still in settings, select the "Swype" option just below the one you just checked, and scroll to the bottom for the tutorial. It will walk you through using Swype and all the edge cases.
6. Disable unknown sources. Go to "Settings" => "Applications" => and uncheck "Unknown sources".
7. Try it out. Go to a place where you can enter text. Make sure your keyboard is not slid out. Select and hold the text field (first-time use only) and switch your input method to Swype. Now you'll be able to Swype away!