To understand the rift between RISC OS Ltd and Castle you have to understand the motivations and personalities of the individuals involved.
In his book 'Accidental Empires: How the Boys of Silicon Valley Make Their Millions, Battle Foreign Competition and Still Can't Get a Date' [link] (well worth a read), Robert X Cringely writes about the how the pioneers of personal computing (Bill Gates, Steve Jobs, Nolan Bushnell at Atari etc) were driven by a need to have absolute control of their respective platforms. In much the same way, there are people at ROL and Castle to whom it is very important to be at the centre of the RISC OS universe, regardless of how small that universe actually is. To them the RISC OS codebase is an immensely valuable asset and to share any part of it is unthinkable.
Considering ROL and Castle are businesses, it's suprising how unbusinesslike the behaviour of their managers sometimes is. One example would be Paul Middleton not bothering to hire a solicitor specialising in contract law when drawing up ROL's licensing agreement with Pace or later on when ROL were initially in dispute with Castle because he thought he was smart enough not to need one. Another would be Peter Wild's belief that no-one would notice if Castle violated the GPL.
Understanding this, it is very unlikely that ROL and Castle will ever be able to co-operate, even if it is what their users want (which it is) and their survival depends on it (which it does).