I lived and worked there back in 2001 when it was still a transitional administration as they didn't gain independence until May 2002.
Airnorth fly ex DRW to DIL in the E170 jet and if your flights are in the same booking as QF flights into DRW your bags can be through checked although it's worth touching base with TL (Airnorth) staff in DRW so they can check your passport has 6 months validity etc.
Hotels in Dili aren't anything flash so don't expect too much. Some of the scenery is spectacular particularly the drive up to Baucau about 3 hours away.
The official language is now Portuguese but some people will speak Bahasa also with Tetum being the local dialect in Dili.
Thanks Denali and Ozbeachbabe. I've been to Port Moresby before so know what you mean about the betel nut. I'll be flying from MEL and flights look easy enough. Main concern is really security - smarttraveller still has a travel warning but it seems pretty quiet there nowadays. Cheers, Mike