The A75 is a 26bit machine, therefore they went to ROL as they produce a 26bit OS. They were also developing an embedded RISC OS 4 already (as stated on the Castle website!).
Castle will obviously want to lisence RO5 and not RO4 as they wantt to merge them as RO5, and legally they may not have the right to lisence RO4 to these companies.
Overall, I can see this being very good at first - however, I also see an abrupt end coming to this otherwise expanding market. Castle have openly admitted to having bigger fish to fry and will no doubt drop the desktop market without the bat of an eyelid (should there be more money drawing them into a wider market). Hopefully, they still hold some dignity and know their roots, but as can be seen by many companies of the past (MS for example), when money enters the equation, interests become distorted.
On the positive side, I believe Castle could easily maintain two versions of RO5, seeing as they apparently have a 26bit HAL; it is unlikely many changes will be made below the HAL and all other layers run on top of the HAL, so they can easily be ported between the two platforms. The only difference may be little incentives. For example, releasing the new 32bit version a few months before the 26bit version - important for developers.
I only hope that this all resolves well for the market and the companies involved.