It ended up being a bit of mashup of various technologies, but the main one is Google Apps Script and ScriptDB to handle the award and badge management, with a jQuery panel that can be embedded in any blog or web page.
Most of the code is in a library, so the amount of code needed to implement your own environment is minimal. Look out for a step by step guide soon.
To see how you would earn a badge, click on one of the badges on the below right, and take the associated quiz.
|The panel on the right is just an iframe with this embedded link.|
The panelset id is all that's needed to defined the set of badges to show, along with their associated questions. Click on a badge to take a quiz.
For more information on how all this works, and to see this embedded in Google Sites see Excel Liberation.