Incentive: easier whatever (try the Flickr demo, it is quite cool)
Who's going to develop: Yahoo (obviously) and (hopefully) a flock of hackers (if _why is playing with it you can be sure it will attract a lot of crazy people :)
I don't have enough kind words for Redmine http://redmine.org. I have been using it for some time and it is perfect as a simple bugtracker/SVN browser/wiki.
It's open source and built in Rails, and it's easy to tweak to suit your needs (via a plugin system) and perfect if you want to get your feet wet with Rails.
As for speed, I'm using it on a shared host with Passenger and it fast enough. Speed on a VPS is quite nice, and it flies on a local network.
For more advanced stuff, your best bet is Prototype.
Dojo, YUI (and ExtJS, not on your list) are good if you have a massive team of JavaScript developers and need standards and solid documentation, but are overkill for 90% of projects.
I've done ExtJS and jQuery for the same project recently.
Ext has a nice DataStore object for accessing remote data. And Ext has all those great "rich" components. But I found it wasn't much more work to do my own components in jQuery. (Tree is very simple to implement in jQuery from scratch)
I came here to say pretty much the same comment, haml is awesome (I'd much rather use it in a project than something equivilant to generate xhtml [sass is nice too :P]).
Would love to hear more about the business side of this, because this sounds like the ideal side project for natural born tinkerers!
It may be too soon in the project's lifetime for any insights, but if there's any wisdom nugget you can share it would be really nice :)