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Are they merging code from neovim, or is it a parallel implementation?

Parallel. Bram (Vim maintainer) doesn't seem to like Thiago (Neovim lead dev).

I think the former---from what I've heard neovim and vim are on very good relations, and here is the fruit of that.

Negative. NeoVim does away with supporting the ancient systems that are important to Bram for some reason. I seriously doubt they will merge.

Good relations =/=> must plan to unfork, at least in a post-git world.