As I am entirely too lazy to do my own research, and you are relatively close at hand, can you tell me if there are any "issues" with dropping 29ers on a Pugsley? Is the offset a big problem? Do I need a specially dished wheelset?
There can be issues. With the "normal" Pugsley 135 offset front fork it would be impossible to just drop in your 29er front wheel since it has 100mm axles. If you have a 100mm fork this will not be a problem.
For the offset fork or the rear, you can just drop in a 29er rear wheel but it will not be centered on the bike( there are pictures of this in earlier threads but you will have to look them up yourself). The bike would be rideable this way but you might notice a handling difference. There are people who say they notice a difference in handling on a Pugs or 907 due to the offset with the wheelsets they come with. I think that is most likely them attributing a handling issue caused by something else to the offset frame and fork since it looks so different. If you look at it objectivly on both those bikes as designed the wheel is dead centered in the frame and the only thing "offset" is the hubs and stays or fork blades. What that means is that maybe 400 grams of material is moved over 17.5 mm to one side. On a 30# + bike I think it would take a very sensitive person to feel a handling difference from that. If I've overlooked something here I'm sure I'll hear about it.
So unless you want to ride with your tires off to one side you do need a specially dished wheelset. There are people who say you can't build a strong enough 29er wheel since the spoke holes can't be offset enough on the narrow rims. There are a bunch of other people happily riding around on their dished narrow rims.