I'm not sure if there is anything to this rumour as all I know is what I've read here but it seems to make a lot of sense. The market will not be able to support the ambitions of both carriers (either short or long term), Dubai Inc., seems to be in need of some cash and there is a new gargantuan airport being built that is roughly equidistant from both cities.
If done as a partnership with egos left at the door (I know, what are the chances), with the stronger of the two management teams running the whole thing, it could probably work out well. As far as merging of the seniority lists, based on what I've seen, when it's left to the pilots, the fact that we'll be told how it's going to be done might actually be a good thing. At least we'll know who to blame (same as always) and it won't be other pilots. It's not like seniority counts for that much at either carrier.