Ah, my recollection was that the Django guys wanted to include South in a previous Django version (maybe 1.3?) but that the South developers didn't want that to happen. I had a quick look and couldn't find where I read that, and you seem to know better than I do, so I'll assume I'm misremembering something.
this was echoed at djangocon europe, they're looking to split functionality between stuff that every migration app could use (like generating alter statements, etc), and the actual tool itself.
I don't think either "side" (if there is such a thing as "sides" here -- South's lead developer has a commit bit on Django) wants to just transplant South into Django directly. The plan, which got hashed out secretly behind closed doors in a shadowy back room (on our public mailing list), is to work the low-level support for migration-ish stuff -- APIs for DB manipulation, etc. -- into Django, but not officially "bless" any particular high-level implementation.