Wow, I've been thinking about this for a few months, thinking it was a pipedream, and it's so crazy to hear that there was really talks going on.
The best outcome for the CFL would be two independent leagues with inter-league play. I expect the CFL will not sacrifice the Canadian game, so hopefully all games involving the Canadian teams (or at least on Canadian soil) would be under full Canadian rules.
On the XFL side, they get the stability of having nine established teams to fill out their schedule. It would mean not having to start with 8 to 10 teams of their own, more like 4 teams in the best markets.
I sincerely hope that XFL is considering adopting Canadian rules, or something close to it, but I expect the biggest stumbling block would be field size. It would really cut down on the number of potential markets and venues. The best shot would be adopting the BMO field dimensions and play out of soccer stadiums, but even those stadiums would probably require modifications to their endzones.
Overall, I'm excited. Better to cooperate than compete. Who knows, maybe someday there will be a Mexican league joining the inter league play.