I too am quite fond of iTunes DJ, but after a few minutes of playing around with Up Next it seems like a big improvement.
First, it's always on, so whatever "playlist" you're listening to, you can manually insert something into the play order by finding a song and clicking "Add to Up Next." Here a playlist can be any selection of songs, be it an album, a genre, all songs from an artist, or an actual playlist. It's random or in order by your choice.
(You can replicate old iTunes DJ playlist behavior by clicking on Songs to show your whole library, playing a song, and clicking the random icon. If you then look at the Up Next list, you'll see a bunch of random songs from your library. Add and rearrange to your heart's content...)
Second, using "Add to Up Next" puts the selected song at the end of *your* selections, rather than at the end of the current iTunes DJ playlist. Dragging a song from the library to the Up Next list appears to be identical to using the "Add to Up Next" pop-up menu item.
Third, it works in the mini player, too.
All that said, I haven't had a chance to try any of this with the iPhone Remote app. If it doesn't work reasonably well there, it will be a big drag. But given the thought they appear to have put into this feature, I'm hopeful...