I think that's fairly reasonable. It would be good if this case was
handled much more smoothly in bzr core, which is possible (and vila
had some ideas towards it) but for now this would be a good way to
handle it in qbzr.
One thing you could also do is show a per-file-id log on the two
conflicting files. Generally speaking I think showing the history
leading up to a conflict could be a useful thing to do.
Martin