Hi,
i am sure that much good can come out of this collaboration, too.. But even after the first heated debates calmed down somewhat i still find it unfortunate to use the exact same name. Think of the outrage that ensued when some corporation tried to trademark the "linux" name (you can read a summary on the wikipedia linux page).. The main difference to the nexuiz case was that at that time the project inventor and leader didn't like it either. At that time contributors and developers both went to court to protect the name and won. Imagine Linus had announced to the linux crowd that Sun Microsystems licensed their code (in a similar way as it happened with nexuiz, i.e. cleared with authors and replaced if not) and would release "Linux", a proprietary Unix OS :D He would probably have been killed ;D
Many open source projects are emotional beasts. People attach good feelings with a name. It means something. Nexuiz is known (albeit not too widely) as an open source project. It's simply not a good idea to just take the exact same name and latch it onto a closed source, proprietary product, even if it shares code and properties with the open source one.
As soon as you release an open source project and it gains some momentum, there's no such thing as a single "owner" anymore. It has become something bigger than that. Quite frankly I'm a bit surprised that you (or maybe only Lee) didn't foresee the ongoing discussion and outrage..