I just finished an installation of 1.7 rc2 on my webhost. I uploaded content, added users, assigned tasks, etc. etc. While testing, I deleted a task, went to the trash workspace, and hit the 'empty trash' button. This resulted in a message stating that 31 items were deleted. I lost all my users, companies, tasks, calendar functions, etc. About the only items that remained were the worspaces themselves.
I did double check the databases and all references to users and files were erased. The physical files had been deleted as well. I will reinstall and try to recreate.