@BobC We will be open-sourcing most, if not all, of our 6LoWPAN stack, including the AES encryption piece, so all the details will be revealed in the future. It is largely based on Contiki as well as the 6LBR system. However key exchange issues are not covered by these projects.
The AES encryption @renec is discussing has both a 'network key' which is used for general traffic across a given 6LoWPAN network broadcast domain, and a 'device key' which is used for one-on-one communication with a device. These keys will change every X-period of time (X being a value we are tweaking right now), so if a key is somehow compromised it will eventually change. The key-exchange mechanism itself is not something we can discuss yet, but it will be part of the stack.
Hope that sheds a bit of light on this. Also, this is part of why we are quite excited about Thread, as it will provide a standard for doing some of these type activities - whereas before, many people were using different, competing ideas from RFCs, or just doing something proprietary.