The Enciclopedia libre at http://enciclopedia.us.es/ is much larger and more active than the Spanish Wikipedia at http://es.wikipedia.com/ (in fact, it is by a large margin the biggest non-English free encyclopedia and the third largest wiki in the world).
I think we should junk our Spanish Wikipedia, provide a link to their site on our main page (they probably don't like to be called Wikipedia, so we could simply say "non-English sister projects") and have our interwiki links point to them rather then to the Spanish Wikipedia.
And if we ask nicely, we may even get a link back to wikipedia.com.
Axel
P.S. I would assume that over time, other international Wikpedias will prefer to operate out of their own countries, to improve connection speeds and gain more contol, and I don't see anything wrong with that.