Wow...
First off, with Nvidia purchasing Ageia, that's what's going on, JayDogg. Take a look at current happenings in the market first before you make a comment. These X2 and Crossfire/SLI solutions are just the first step in creating a true multi-core GPU. Although I will be honest, the progression is slow, especially for AMD.
Secondly, these "wars" are a good thing, but only when they're not in a stalemate. Having a proper "war" between these graphics giants, means that they are constantly trying to outdo each other. Take a look at AMD vs. Intel a few years ago (yeah, I know it's not GPU, but the point is the same). AMD tried to do something completely different and succeeded (Athlon), then Intel did something different again, and again had a big success (Core 2 Duo). The problem is that AMD is suffering too much to push the envelope. With this calm, Intel and Nvidia can just keep dong the same old thing (come on, what's the real difference between the 8800 and 9600?). This comfort that Intel and Nvidia have right now is what's halting progress.
Although, having Intel step in there could be a good thing and a bad thing. The good is that Intel has the funds to do just about anything. With another push to a new technology (hopefully better), AMD and Nvidia will should respond in kind. The bad news is that AMD may not be able to keep up. Even if they go through the merger (or acquisition or whatever it is), if Intel's solution is a big hit, AMD could just fold. I don't see there being that big of a financial pressure on Nvidia, they have a much larger bankroll than AMD. As an AMD (ATI) fan boy (I like the CCC interface and hardware concepts much more on the AMD side of the fence) I don't want to see AMD go bankrupt.
There is the chance, though, that Intel will not target AMD at all. If AMD falls, Intel will be the only real desktop processor manufacturer. This would cause big problems for the company, something that I'm sure they are aware of. (I don't include Nvidia as a processor manufacturer, because my understanding is that Nvidia's step into the processor market is just another way to off-load the processor from a few calculations the graphics card can do. I could be wrong on that though). Having AMD out of the picture could be a cause for a monopoly investigation in the processor market. No business wants to go through an ordeal like that.