Just tried this for the first time tonight.
Raw: Yeah, they're sour. Actually, I'd use the word "astringent" more. Leaves a brief sort of "chalky" flavour in the mouth, although it disappears rather quickly, so it's not abhorrent. Not something I'd go out of my way to eat, but I snacked on them for a little bit. Overall, though, the texture and taste just screamed out to me "I should be cooked!". I suspected a significant pectin content.
Seeding: You have to get the stones out, since they're hard and don't soften with cooking. I guess they got a bit easier to remove after cooking, but not tremendously so. Was a lot of work due to the small size per berry. Work that I should have been wearing gloves during due to all of the acid. I'm sure there's a device somewhere that can separate the pits from the flesh; would be useful.
Cooked without sugar: little colour change. The astringency turns into just sourness (no chalkiness), as expected. I was disappointed that it still retained a mealy texture (there seems to be non-soluble fibre in the flesh), I guess I was expecting that to go away. The texture was a bit like applesauce, and of course it was very sour.
Cooking with sugar: I was expecting more colour change than happened, but there was indeed some. I slow cooked it for a rather long time, as it seemed to take time to develop. You have you use a pretty good amount of sugar. I ended up with something quite akin to a somewhat more sour applesauce. It kept itself fairly thick, even with the addition of water, reinforcing the pectin hypothesis; I bet you could combine these with sweet/low acid fruits in jam/jelly making where the other fruit provides sweetness and the phyllanthus provides acid and pectin.
So, the resulting product isn't incredible, and not worth the work - but it's not bad either.
As a side note, I went far too overboard on acid this evening; I wasn't thinking ahead when in the same trip out I purchased mangosteen, langsat, santol (sour variety), and phyllanthus. My mouth is not happy with me :Þ The first two aren't that acid, but after the latter two...