The D(0) clusters interact low-dimensionaly, i.e. they condense into form of strings rather than blobs in similar way, like the chains of magnetic dipoles magnetized beads. It would indicate, each cluster behaves like tiny superconducting magnet.
To call it Rydberg matter is somewhat misnomer, because every superconductive ring should be called a Rydberg matter too.
Now I see what you mean. Holmlid also calls Rydberg matter H(1). It's related with H(0), which can be considered a condensed form of Rydberg matter, but they're not the same thing. As far as I'm aware of, superfluidity and superconductivity was observed in the latter, but not the former. There's some information on the H(1) which you may find useful/interesting in this open access paper from 2002 (try searching in the text "clusters of RM are strong magnetic dipoles").
The details on how H(1) can form H(0) and viceversa aren't clear to me. I'm not sure if Holmlid has described yet the exact dynamics.
I'm intrigued, which role the KFeO2 (a quite boring compound) plays in their formation. Note that it's ferromagnetic by itself.
KFeO2 is the active phase of potassium-iron oxide catalysts and incidentally also what allows Rydberg matter to easily form. There's a paper or two by Holmlid et al. on the subject, here's one (paywalled).
I just hope, that Holmlid doesn't consider the ferrite particles evaporated by laser as some exotic form of matter...
In several of the latest published papers he doesn't use the laser directly on the catalyst, so I don't think he's seeing ferrite particles.
Either way, the most relevant claim for LENR experiments is the reported emission of elementary particles (e.g. muons) after making hydrogen gas flow through the catalyst, before laser irradiation. I feel that in trying to demonstrate that H(0) is unphysical many people are missing this point.