I think Intel are far too sensible to make nVidia cease relations with AMD. More like they'll just be raking in nVidia's profits and developing a better Intel based nVidia platform
If this goes through then mefinks Intel graphics solutions are going to be getting better fairly rapidly
In the long run though I cannot see what intel will gain from nVidia by totally "swallowing" them up. Seems like the ATI>nVidia and intel>AMD wars are really hottinh up