It sounds like they're basically just basing it on the same Webkit fork as Apple and Chrome with a few features disabled...
Or rather with less features disabled.
I'm not sure whether even Safari and Mobile Safari comes from the same branch of webkit. Chrome and the Android browser definitely don't ... When I spoke to Apple Engineers about how WebGL is available in iAds ("running html5 in a normal webkit view") they mentioned that "webGL is in mobile webkit, but not in mobile safari". This thing, suggesting there's a "mobile webkit", when PPK has shown that feature-wise, there isn't, made me wonder how the webkit tree really looks...
Well, Apple's repos and bugtrackers are internal so we may never know. However the differences between them can indicate separate repos or at least far away branches. N9's browser is built from WebKit2, so it may be also more prone to crashes due to Chrome-like process separation, a feature Lion and iOS 5 will also have.
I'm especially happy of multi-touch and proper contentEditable support. MeeGo Forums have more discussion on the browser