Updated Apr 20:

So far there's been no change in the status of this problem, however recently due to the implementation of Der Fuhrer Linden's Third Party Viewer Policy Emerald's 1101 release has been removed from their website.   The source code to the 1101 release is still available, however that option is only viable for those who are familiar with the process of compiling / building a client.

For now, it would seem that either Imprudence or Hippo are viable alternatives.

Updated on Feb 27:

I did a bit of digging and found the following on Emerald's blog:

http://modularsystems.sl/index.php?option=com_agora&task=topic&id=2272

For now, it seems the workaround for this issue is to simply go back to the 1101 version of Emerald.

This week's update - Feb 22, 2010 has been a big one.  Among various fixes and improvements to OpenSim itself, we've made a ton progress on our Free Market system (more information on this soon, but think SLX for PS) as well many other little fixes here and there having to do with our the performance of our PseudoServer extensions.

In particular, there seems to be an issue regarding the Emerald viewer with OpenSim wherein on a clean cache in-world textures will not load.  If you find this to be your experience, I would suggest downloading and using the Imprudence viewer from http://imprudenceviewer.org/wiki/Downloads.  It may not have all the flashy new features, bells, and whistles of Emerald however it works and your scene will not show as completely grey and filled with poof-ball avatars.