I've published this as [[http://bitbucket.org/rctay/satchmo/changeset/57ef2e3dcc15/ | 1423:57ef2e3dcc15]].
In the default template, there'a simple "Loading" text indicator that's displayed when we retrieve the state choices. Users can hook onto callbacks that are provided to override this for more fancy stuff.
To use this, make sure that you've turned on ENFORCE_STATE and turned off in_country_only (//"Only sell to in-country customers?"//).
PS. A note on stability: I've been playing around with this for some time, by testing out the generation of state choices and messing the state field in the form data to check validation. So far, it has held out well.