Not as far-fetched as many have assumed - Taiwanese President Chen Shui-bian today signed a joint declaration with the leader of the opposition today, stepping back from some of the more extreme rhetoric of the pro-independence camp, of which Chen is the leader.
Beijing-Taipei relations have been decidedly less stable in the last decade then they were when both countries were dictatoships, for a reason it won't take a second to grasp: there's a large political payoff for candidates in Taiwan to position themselves as the anti-Beijing candidate. Fortunately, it's not that large - the "pro-Beijing" camp (actually, "anti-pissing off Beijing" would be most accurate) would still have won the last two elections if it hadn't been for division in their ranks.
The problem for people trying to keep a lid on extremists in Taiwan is that, historically, China hasn't ruled Taiwan since 1895. That's when China lost a war with Japan, and Taiwan became a Japanese colony. (You can see on this map that Okinawa and the Ryukyu Islands lead more or less directly to the island of Formosa.) This more than a century of separation has led to a number of important differences between the two Chinas. In a very real sense, There really is only one China, but Taiwan isn't part of it. "One China" was a cold-war myth that the US adopted so as not to completely abandon Taiwan, but it's not a realistic statement of fact.
(This latest news should only be seen as a baby-step towards eventual reunification. It's not going to happen peacefully so long as the CCP runs the mainland.)