Anyone ever used one in a design or retrofitted one to a home?

No personal experience installing them, but here's some info from GreenBuildingAdvisor.com:

About Grey Water Systems
To collect and use gray water for irrigation, drain lines from bathroom sinks, tubs, showers, and the washing machine empty to a centrally located holding tank, typically in the basement or crawl space. A filter at the holding tank screens out particles. Water is either drained or pumped from the tank to the irrigation lines.

A properly designed system has overflow protection for both the holding tank and the irrigation lines. The overflow valve for the holding tank feeds water directly to the sewer line if the filter clogs. Overflow protection for the irrigation lines can take two forms: a diverter valve directs water to secondary irrigation loops or, if the irrigated area becomes saturated, to the sewer line.

Plumbing codes vary
Options for reusing gray water vary according to local plumbing codes. If the building inspector allows, you can decide between systems that capture all of a house’s gray water or just the drain water from specific sources.

Although the bacteria in gray water are generally aerobic, gray water can’t be stored for longer than 24 hours without using up all of the oxygen in the water and encouraging the growth of smelly anaerobic bacteria.

That's why the easiest and least expensive use for gray water is irrigation. The irrigation lines should be in the biologically active portion of the soil — no more than 9 in. to 12 in. below the surface.


And a couple of links:

Water Conservation Alliance of Southern Arizona

graywater.net