Just for the record, we decided to continue with two domains, localized .com and localised .co.uk. They will no longer be maintained on different continents - Google says host location is no longer important - but will be run as two wpmu sites.
For us, the pros and cons outlined in all answers below came down to - we were concerned that our good UK rankings would be affected, and the work of maintaining two near identical sites did not seem too onerous.
href_lang sitemaps remain a problem - what a nightmare that system is.