Sounds like an, err, exciting prospect? You've just got over the troubles man!
It seems daft, but as long as NI is part of the UK one side will never back down, if it isnt then one side will eventually just die out.
What makes you so confidant of distinction between the two sides? Why aren't militant IRA-style sentiments going to die out? What ensures covenant-style sentiments will?
The IRA will die out because it will no longer have a place, the objective of the IRA is to achieve a united Ireland, if that exists then the IRA will only exist in the history books from that day onwards.
I'll go along with what you say will come of the IRA in a united Irish state (there will always be some diehards wanting to take things back to the Civil War days, but we can ignore them). You're not talking about what I'm talking about, though. I'm asking you why the IRA-types aren't going to go away now. Will they never back down? More to the point, will enough of them never back down to ensure they're worth paying a great deal of attention to? Conversely, why are you so certain the prods will 'see sense and settle down' once they're forced into an entity many of them don't (and I suggest won't) recognise? Why are they different to your neighbours?
If England gave up NI, rather than be a new nation, we would just rejoin the rest of Ireland, so keep Scotland and Wales, let NI go 
That's the worst case scenario for you. Your best bet of a Southern-orientated Northern Ireland/United Ireland is of the whole UK splitting up and becoming federalised segments of European state.
How is it worse case scenario? We would come part of the Republic of Ireland and go from there, it wont be peachy at first, but over years things would fall into place and sort themselves out and it will all have been well worth it. Also I dont think the UK splitting up and becoming federalised segments of a European state is the only way NI will be released from England, especially when Scotland being given independence may be within the next 10 or 20 years.
I should've explained my last comment further. Unlike you, I don't see orange NI rolling over once they're ripped away from the UK as an inevitability. The best way of encouraging the most significant elements of them to make do with such a scenario would be to eliminate any hopes they might have of restoring things to how they 'should be'. They couldn't rejoin the UK if it didn't exist anymore - and more to the point, if no other Brits had any intent of recreating it. They'd be orphaned.
As for the EU, I didn't say it was the only way, I said it was the best way. It would subsume any Anglo-Irish business.