The jury is still out on whether a large rear wheel drive car will sell in large volumes at a price point that they can make any money. (The Grand Marquis and Crown Vic's development was amortized long ago - it is a pretty cheap car to build) Was RWD chosen just so Daimler can amortize more of the development costs of Mercedes products over a larger production amount?
Yep, the Daimler merger is working out very well.
I think RWD could work, if they make it exciting enough. The Crown Vic and Grand Marquis don't sell because they're dull and have looked about the same since 1992, in spite of a few facelifts in between. A buddy of mine has a '95 GM, and the '03's are identical inside, with the exception of cheaper carpeting. They might make a good police car or taxi, but nobody really wants them as a family car anymore.
Also, with being a V-8 only model, Ford is only going to build so many CVs and GMs, no matter what the demand is for them. If they sell too many, then their CAFE numbers are going to sink and they'll get fined. At least with the upcoming LX models, since they're going to have V-6 engines as well, overall they shouldn't hurt DC's CAFE numbers too much.