It's not dead. It's manager dependent, I guess - It's not carte blanche to do whatever you want (was it ever?), so whatever you're doing needs to have, or potentially have, _some_ value to Google, but the bar for that value is pretty low.

It also isn't necessarily just "picking up other team's bugs" (I mean, you can if you want) - just last week my teammate finished up a 20% project to make a new UIView templating/auto-layout system for iOS, for the first example I can think of. This sort of thing is pretty common.

I've had a number of different managers at Google and I've never had one that ever tried to tell me not to do anything, and even when they wanted me to do something their direction wasn't particularly strong. As far as my experience goes you can do anything you want at Google as long as it appears to have some value.

Not a googler, but I'm related to one, and I'm told that it's dependent on your ability to set boundaries for yourself. Nobody should dock you for saying "hey, I'm working on my 20% time now". If 20% time is dying, it may be partly that there are some bad managers who will dock you for it, and it may also be partly that programmers would like it but don't feel empowered to use it (for political/personal/personality reasons).

iTerm2 is my 20% project.

Hey man, I cannot understate this, iTerm2 is the best part of my dev environment. I cannot thank you enough for this.

It's still alive.

20% at Google is a big joke: it's basically picking up low priority tasks and bugs from other teams backlogs (low priority = will never do).

It was dead and gone when I worked there, as in manager explicitly told me not to take it seriously, and that was 2012.