Have you run the OS X installer over your current installation by chance? This will revert root's .forward back to /dev/null.
In any case, have a look at it again with 'cat ~root/.forward' and make sure it's alright.
If that looks OK, you might find other clues in the log file generated by sendmail called "mail.log". The command "tail" is good for veiwing just the ends of potentially long log files like this.
By default, tail will show the last 10 lines of the file with this command:
To see more use the -n flag like this, where the number following the n equals the number of lines from the end of the file you would like displayed (in this case 100):
tail -n100 /var/log/mail.log
If you see something that might be fishy in there (or otherwise), feel free to post the output here, or email it to me.
By the way, how are you able to tell that root is getting the mail?