I haven't seen the Ripple code so I can't comment on the latest endeavor, but Ripple as a concept (by Ryan Fugger FYI) is the combination of 2 mechanisms:
- The ability to extend a credit line to any of your friends, in any currency.
- The ability to make payments that hop across these credit lines, P2P, like a "Six degrees of separation" from sender to recipient.
I've always felt like this concept was important because it eliminates exchanges (such as MtGox) as a bottleneck, since it enables people to access the system, and move funds in and out, directly through their own friends.
If the current Ripple venture departs from that in any way, perhaps one of the Ripple guys can post a comment giving further detail. But that's my understanding of it.
Open-Transactions, on the other hand, is a software library for financial cryptography, including a prototype server and a high-level client API (available in most languages.)
The OT server is able to process all sorts of transactions... issuers can issue currencies onto any OT server (or preferably onto many OT servers.) Then users can open accounts in these currencies, and send payments to each other using a variety of financial instruments such as account transfers, cheques, and untraceable digital cash.
Open-Transactions also supports markets (for offers and trading, like you might see on MtGox or other exchanges) as well as basket currencies.
Open-Transactions also features a full client-side scripting engine, so you can create your own financial scripts using the OT API. There are also scriptable contracts ("Smart Contracts"), which can be signed by multiple parties and then activated on an OT server for processing. OT comes with a few sample smart contracts, such as Escrow, and Two-Way Trade.
BTW, it wouldn't be too hard to build Ripple into OT, I already worked it out in my notes here: https://github.com/FellowTraveler/Open-Transactions/wiki/Markets
(Who knows if/when I'll ever get around to adding that, however.)
*edit: article describing the trust differences between OT and Ripple: http://opentransactions.org/forum/index.php?topic=3759.0