Right, in fact I would guess that both Marvel and DC have played so much with their own continuities that merging the two would not be much more of a stretch than many of the previous retcons.
In theory, sure. DC's absorbed other continuities/companies into its own, as with Charlton and Milestone (and Wildstorm, I think) -- not to mention separating out the Vertigo titles for a while and then folding them back in. Easy enough to do when you reboot the whole universe every decade or two anyway. Might be a bit more of a novelty for Marvel, although they have treated other continuities as part of their own universe before, such as GI Joe, Transformers,
even Jack Kirby's weird 2001
sequel/spinoff comics. (And maybe even Star Trek
; an early storyline in their post-TMP Trek comic alluded to a character from Marvel's Dracula