After a very productive talk with legoktm @IRC, it seems some of these changes have already been made as part of the rewrite at http://svn.wikimedia.org/viewvc/pywikipedia/branches/rewrite/ documented at http://botwiki.sno.cc/wiki/Rewrite , and only a few things remain:

* GIT migration
    Mediawiki will not support SVN forever. I wouldn't want to copy and break away completely - history is very important for maintenance (Yes, i saw the previous GIT posts here)

* Python3 migration
    Guido started it for a very good reason. Much better Unicode, cleaner libraries.

* Directory structure
   I propose two separate root dirs:
       pywikibot\ - current code
       pywikibot3\ - Python3 rewrite
   The directories should be at the same level, and not as branch, because we will never be able to merge them back together - anyone who wants to continue using Python26+ and older features will keep using pywikibot, and all the new code plus migrated scripts will move to pywikibot3

* API only
    No need to maintain complex and cumbersome Special:Export and page  scraping methods. If mediawiki installation doesn't support API - they don't want bot access. If their installation is over 5 years old, they can use older pywiki framework version.
    There is still xml dump support in pywiki, but many functions it seems will not work properly, so maybe we should remove that as well.

* Higher-level HTTP library
    Not as sure about this yet, but it seems python Requests is a better library for the API calls than the httplib2 - for complexity and cleanliness reasons. See http://docs.python-requests.org/

When can we start? :)