Good news about perhaps dropping the upside down, heavyweight YUI DnD.
A good idea to partner with another innovative, fast-moving javascript team - I think that will work well.
Where does this "merger" leave the DomQuery engine that you worked so hard to tune Jack? Will some of your carefully honed code be incorporated in the new jQuery engine, and the DomQuery class go away?
Ext will continue to use DomQuery. jQuery will be offering an option to use the DomQuery engine. The whole jQuery team has been fantastic and this should be great for everyone.
YUI will still be supported, there will just be a nice bridge API for interaction with a base lib.