diff --git a/docs/PROGRESS.md b/docs/PROGRESS.md
new file mode 100644
index 0000000..9441925
--- /dev/null
+++ b/docs/PROGRESS.md
@@ -0,0 +1,431 @@
+# CascadingDev Implementation Progress
+
+**Last Updated:** 2025-11-01
+**Overall Completion:** ~55% (M0✅ M1✅ M2🚧 M3❌ M4✅)
+
+---
+
+## 📊 Quick Status Overview
+
+| Milestone | Target | Status | Completion |
+|-----------|--------|--------|------------|
+| **M0: Process Foundation** | Foundation docs and setup | ✅ Complete | 100% |
+| **M1: Orchestrator MVP** | Core automation working | ✅ Complete | 100% |
+| **M2: Stage Automation** | All 7 stages + moderator | 🚧 In Progress | 40% |
+| **M3: Gitea Integration** | PR/issue automation | ❌ Not Started | 0% |
+| **M4: Python Migration** | Bash → Python hook | ✅ Complete | 100% |
+
+**Current Focus:** Completing Stage 3 (Design), then implementing Stages 4-7
+
+---
+
+## ✅ Milestone M0: Process Foundation (100%)
+
+**Goal:** Establish project structure, documentation, and templates
+
+### Core Documentation
+- [x] `docs/DESIGN.md` - System architecture (3,018 lines)
+- [x] `docs/AUTOMATION.md` - User-facing automation guide
+- [x] `docs/INSTALL.md` - Installation instructions
+- [x] `CLAUDE.md` - AI assistant guidance
+- [x] `AGENTS.md` - Developer guidelines
+- [x] `README.md` - Project overview
+- [x] `VERSION` - Semantic versioning
+
+### Setup Infrastructure
+- [x] `src/cascadingdev/setup_project.py` - Project installer (478 lines)
+- [x] `src/cascadingdev/cli.py` - CLI commands (doctor, build, smoke, release, pack)
+- [x] `tools/build_installer.py` - Bundle builder
+- [x] `tools/bundle_smoke.py` - End-to-end installer test
+- [x] `pyproject.toml` - Package configuration
+
+### Templates (6 files)
+- [x] `assets/templates/feature_request.md` - Feature request template
+- [x] `assets/templates/feature.discussion.md` - Feature discussion template
+- [x] `assets/templates/feature.discussion.sum.md` - Summary template
+- [x] `assets/templates/design.discussion.md` - Design discussion template
+- [x] `assets/templates/design_doc.md` - Design document template (needs enhancement)
+- [x] `assets/templates/USER_GUIDE.md` - User guide shipped to projects
+
+### Policy Files
+- [x] `config/ai.yml` - AI provider configuration
+- [x] `assets/templates/process/policies.yml` - Process policies template
+
+### Ramble GUI
+- [x] `assets/runtime/ramble.py` - Feature capture GUI (PySide6/PyQt5)
+- [x] `assets/runtime/create_feature.py` - CLI feature creation
+- [x] Template META system - JSON metadata in HTML comments
+
+---
+
+## ✅ Milestone M1: Orchestrator MVP + Hook Enhancements (100%)
+
+**Goal:** Python automation engine with cascading rules
+
+### Core Automation Modules (2,469 lines total)
+- [x] `automation/config.py` (182 lines) - Rule loading, merging, path resolution
+- [x] `automation/runner.py` (146 lines) - Rule evaluation, output generation
+- [x] `automation/patcher.py` (720 lines) - AI patch generation and application
+- [x] `automation/workflow.py` (533 lines) - Vote tracking, status reporting
+- [x] `automation/summary.py` (301 lines) - Summary file formatting
+- [x] `automation/agents.py` (438 lines) - AI agent integration
+- [x] `automation/ai_config.py` (149 lines) - Multi-provider configuration
+
+### Pre-commit Hook
+- [x] `assets/hooks/pre-commit` (192 lines bash)
+- [x] Secret detection (regex patterns)
+- [x] Append-only validation for discussions
+- [x] Summary file template creation
+- [x] Python module orchestration
+
+### Cascading Rules System
+- [x] Hierarchical .ai-rules.yml loading (nearest file wins)
+- [x] Template variable support (`{feature_id}`, `{dir}`, `{basename}`, etc.)
+- [x] Path normalization and security (blocks `../` escapes)
+- [x] Rule merging with override semantics
+- [x] 10 rule types defined in `assets/templates/rules/features.ai-rules.yml`
+
+### Multi-Provider AI System
+- [x] Three optimization levels (fast/default/quality)
+- [x] Fallback chains (Claude → Codex → Gemini)
+- [x] Model hint propagation (rule → runner → patcher)
+- [x] Cost optimization via intelligent routing
+- [x] Environment variable overrides
+- [x] Claude subagent setup script (`tools/setup_claude_agents.sh`)
+
+### Testing Infrastructure
+- [x] `tests/test_workflow.py` - Workflow automation tests (7 tests)
+- [x] `tests/test_patcher.py` - Patch generation tests (1 test)
+- [x] `tests/test_runner.py` - Rule evaluation tests (1 test)
+- [x] `tests/test_config.py` - Config loading tests (4 tests)
+- [x] `tests/test_utils.py` - Utility tests (1 test)
+- [x] `tests/test_template_meta.py` - Template metadata tests (3 tests)
+- [x] `tests/test_build.py` - Build system tests (1 test)
+- [x] **Total: 18 tests, 100% passing**
+
+---
+
+## 🚧 Milestone M2: Stage Automation & Moderator (40%)
+
+**Goal:** Implement all 7 stages of the development lifecycle
+
+### Stage 1: Request (100% ✅)
+- [x] Template: `assets/templates/feature_request.md`
+- [x] Rule: `feature_request` in features.ai-rules.yml
+- [x] Automation: Creates `feature.discussion.md` on commit
+- [x] Tested: Working in production
+
+### Stage 2: Feature Discussion (100% ✅)
+- [x] Template: `assets/templates/feature.discussion.md`
+- [x] Summary template: `assets/templates/feature.discussion.sum.md`
+- [x] Rules: `feature_discussion_update`, `feature_discussion_writer`
+- [x] Automation:
+  - [x] Vote tracking (VOTE: READY/CHANGES/REJECT)
+  - [x] Question extraction (Q:, ?)
+  - [x] Action item tracking (TODO:, DONE:)
+  - [x] Decision tracking (DECISION:)
+  - [x] @mention tracking
+  - [x] Timeline generation
+  - [x] Summary file updates
+- [x] Gate creation: `design.discussion.md` when status = READY_FOR_DESIGN
+- [x] Tested: 7 passing tests in test_workflow.py
+
+### Stage 3: Design Discussion (90% 🚧)
+- [x] Template: `assets/templates/design.discussion.md`
+- [ ] Enhanced template: `assets/templates/design_doc.md` (currently stub - needs ADR structure)
+- [x] Rules: `design_gate_writer`, `design_discussion_writer`
+- [x] Automation:
+  - [x] Gate creation when feature status = READY_FOR_DESIGN
+  - [x] Discussion file generation
+  - [ ] Design document maintenance (partially implemented)
+- [ ] End-to-end test: Design stage promotion flow
+- [ ] Tested: Needs integration tests
+
+**Next Steps:**
+1. Enhance `design_doc.md` template with full ADR structure
+2. Test design gate creation in real workflow
+3. Verify design document updates work correctly
+
+### Stage 4: Implementation Discussion (20% 🚧)
+- [ ] Template: `implementation.discussion.md` **← MISSING**
+- [ ] Template: `implementation/plan.md` **← MISSING**
+- [ ] Template: `implementation/tasks.md` **← MISSING**
+- [x] Rules: `implementation_gate_writer` (defined but untested)
+- [ ] Rule: `implementation_discussion_writer` **← MISSING**
+- [ ] Automation:
+  - [ ] Gate creation when design status = READY_FOR_IMPLEMENTATION
+  - [ ] Task checkbox tracking (parse `- [ ]` and `- [x]`)
+  - [ ] PR/commit linking
+  - [ ] Progress tracking
+- [ ] Human gate: Require ≥1 human READY vote
+- [ ] Tests: None
+
+**Next Steps:**
+1. Create implementation.discussion.md template
+2. Create implementation/plan.md template
+3. Create implementation/tasks.md template
+4. Implement implementation_discussion_writer rule
+5. Add task checkbox parser to workflow.py
+6. Test human gate enforcement
+
+### Stage 5: Testing Discussion (0% ❌)
+- [ ] Template: `testing.discussion.md` **← MISSING**
+- [ ] Template: `testing/testplan.md` **← MISSING**
+- [ ] Template: `testing/checklist.md` **← MISSING**
+- [ ] Rules: `testing_gate_writer` **← MISSING**
+- [ ] Rule: `testing_discussion_writer` **← MISSING**
+- [ ] Automation:
+  - [ ] Gate creation when implementation complete
+  - [ ] Test result tracking ([RESULT] PASS/FAIL)
+  - [ ] Checklist progress
+  - [ ] Bug linking
+- [ ] Tests: None
+
+**Next Steps:**
+1. Create testing templates
+2. Design test result format
+3. Implement testing rules
+4. Add result parser to workflow.py
+
+### Stage 6: Review Discussion (0% ❌)
+- [ ] Template: `review.discussion.md` **← MISSING**
+- [ ] Template: `review/findings.md` **← MISSING**
+- [ ] Rules: `review_gate_writer` **← MISSING**
+- [ ] Rule: `review_discussion_writer` **← MISSING**
+- [ ] Automation:
+  - [ ] Gate creation when testing complete
+  - [ ] Finding tracking
+  - [ ] Approval tracking
+- [ ] Human gate: Require ≥1 human READY vote
+- [ ] Tests: None
+
+**Next Steps:**
+1. Create review templates
+2. Design review findings format
+3. Implement review rules
+4. Test human gate enforcement
+
+### Stage 7: Release (0% ❌)
+- [ ] Template: Changelog generation **← MISSING**
+- [ ] Template: Rollback notes **← MISSING**
+- [ ] Rules: `release_writer` **← MISSING**
+- [ ] Automation:
+  - [ ] Changelog from commits
+  - [ ] Version tagging
+  - [ ] Release notes
+- [ ] Human gate: Require maintainer approval
+- [ ] Tests: None
+
+**Next Steps:**
+1. Design release automation
+2. Create changelog generator
+3. Implement version tagging
+4. Add maintainer role checking
+
+### AI_Moderator Protocol (0% ❌)
+- [ ] Nudge system for inactive discussions
+- [ ] Escalation paths for blocked features
+- [ ] Conversation guidance
+- [ ] Question tracking and follow-up
+- [ ] Vote reminder system
+- [ ] Timeout detection
+
+**Implementation Location:** `automation/moderator.py` (does not exist)
+
+**Next Steps:**
+1. Create moderator.py module
+2. Implement nudge timing logic
+3. Add escalation rules to policies.yml
+4. Integrate with workflow.py
+
+### Bug Sub-Cycles (0% ❌)
+- [ ] BUG_YYYYMMDD_slug folder structure
+- [ ] Bug-specific templates
+- [ ] Bug tracking rules
+- [ ] Integration with testing stage
+- [ ] Bug lifecycle automation
+
+**Next Steps:**
+1. Design bug folder structure
+2. Create bug templates
+3. Add bug rules to features.ai-rules.yml
+4. Link bugs to parent features
+
+### Discussion Summaries (90% ✅)
+- [x] Marker-based updates (SUMMARY:* blocks)
+- [x] Vote tallies
+- [x] Question tracking
+- [x] Action items
+- [x] Decisions
+- [x] @mentions
+- [x] Timeline
+- [ ] Links (PR/commit auto-detection) - partially implemented
+- [ ] Snapshots for large discussions
+
+---
+
+## ❌ Milestone M3: Gitea Integration (0%)
+
+**Goal:** Integrate with Gitea for PR/issue automation
+
+### Gitea Adapter
+- [ ] `automation/adapters/gitea_adapter.py` **← MISSING**
+- [ ] Gitea API client integration
+- [ ] Authentication setup
+
+### PR Automation
+- [ ] Auto-create PRs from implementation stage
+- [ ] Link PRs to feature discussions
+- [ ] Update PR descriptions with status
+- [ ] Auto-label PRs based on stage
+- [ ] Comment with review findings
+
+### Issue Tracking
+- [ ] Create issues from action items
+- [ ] Link issues to discussions
+- [ ] Update issue status from discussions
+- [ ] Close issues when tasks complete
+
+### Status Reporting
+- [ ] Post stage status to PR comments
+- [ ] Update PR labels on stage changes
+- [ ] Link to discussion summaries
+- [ ] Report blocker status
+
+**Next Steps:**
+1. Research Gitea API capabilities
+2. Design adapter interface
+3. Implement basic PR creation
+4. Test with local Gitea instance
+
+---
+
+## ✅ Milestone M4: Bash to Python Migration (100%)
+
+**Goal:** Migrate from bash-heavy hook to Python-powered automation
+
+### Architecture
+- [x] Core rule resolution in Python (automation/config.py)
+- [x] Patch generation in Python (automation/patcher.py)
+- [x] Bash hook as thin wrapper (192 lines)
+- [x] Python modules handle complex logic (2,469 lines)
+
+### Bash Hook Responsibilities (Minimal)
+- [x] Secret detection (regex patterns)
+- [x] Append-only validation
+- [x] Summary file template creation
+- [x] Python module orchestration
+
+### Python Module Responsibilities (Core)
+- [x] Rule loading and cascading
+- [x] AI prompt generation
+- [x] Patch generation and application
+- [x] Vote tracking and summary updates
+- [x] Provider integration and fallback
+
+### Error Handling
+- [x] Python exception handling
+- [x] Graceful degradation
+- [x] Debug logging (.git/ai-rules-debug/)
+- [x] Clear error messages
+
+**Status:** Completed early in development (built right from the start)
+
+---
+
+## 📈 Overall Progress Summary
+
+### By Component Type
+
+**Templates:** 6/13 (46%)
+- ✅ Feature request, discussions (feature, design)
+- ❌ Implementation, testing, review templates missing
+
+**Rules:** 10/16 (63%)
+- ✅ Request, feature, design rules complete
+- 🚧 Implementation gate defined but untested
+- ❌ Testing, review, release rules missing
+
+**Automation Modules:** 7/9 (78%)
+- ✅ Core modules complete (config, runner, patcher, workflow, summary, agents, ai_config)
+- ❌ Moderator, Gitea adapter missing
+
+**Testing:** 18/30+ (60%)
+- ✅ 18 tests passing (core automation)
+- ❌ Stage promotion tests missing
+- ❌ Integration tests needed
+
+**Documentation:** 7/7 (100%)
+- ✅ All major docs complete and up-to-date
+
+---
+
+## 🎯 Recommended Next Steps
+
+### Short Term (1-2 weeks)
+1. **Complete Stage 3:**
+   - [ ] Enhance design_doc.md template
+   - [ ] Add end-to-end design stage test
+   - [ ] Document design stage workflow
+
+2. **Start Stage 4 (Implementation):**
+   - [ ] Create implementation templates (discussion, plan, tasks)
+   - [ ] Implement task checkbox parser
+   - [ ] Add human gate enforcement
+   - [ ] Test implementation stage promotion
+
+### Medium Term (3-4 weeks)
+3. **Add Stage 5 (Testing):**
+   - [ ] Create testing templates
+   - [ ] Implement test result tracking
+   - [ ] Add checklist automation
+
+4. **Add Stage 6 (Review):**
+   - [ ] Create review templates
+   - [ ] Implement findings tracking
+   - [ ] Add human gate enforcement
+
+### Long Term (5-8 weeks)
+5. **Complete Stage 7 (Release):**
+   - [ ] Design release automation
+   - [ ] Implement changelog generation
+   - [ ] Add version tagging
+
+6. **Implement AI_Moderator:**
+   - [ ] Create moderator.py module
+   - [ ] Add nudge system
+   - [ ] Implement escalation paths
+
+7. **Add Bug Sub-Cycles:**
+   - [ ] Design bug workflow
+   - [ ] Create bug templates
+   - [ ] Integrate with testing stage
+
+### Optional (Future)
+8. **Gitea Integration (M3):**
+   - [ ] Research Gitea API
+   - [ ] Implement PR automation
+   - [ ] Add issue tracking
+
+---
+
+## 📝 How to Update This Document
+
+When completing items:
+1. Change `[ ]` to `[x]` for completed checkboxes
+2. Update completion percentages in section headers
+3. Update "Last Updated" timestamp at top
+4. Update "Overall Completion" percentage
+5. Update "Current Focus" line
+6. Move items from "Next Steps" to checkboxes as work progresses
+7. Commit changes: `git add docs/PROGRESS.md && git commit -m "docs: update progress tracking"`
+
+---
+
+## 🔗 Related Documents
+
+- **DESIGN.md** - Full system architecture and design rationale
+- **AUTOMATION.md** - User-facing automation guide
+- **CLAUDE.md** - AI assistant context and guidance
+- **AGENTS.md** - Developer guidelines and conventions
+- **README.md** - Project overview and quick start