So to answer your first question about XX Merge: Nope, still no Arcade Fire, no-shows once again. And it still didn't matter because Saturday's fourth-night festivities once again featured an absolutely captivating act in the middle of the program.
This time, it was singer/songwriter M. Ward, who trades in spectral late-night ruminations that are long on atmosphere. Ward's latest wrinkle is to add the further dimensions of crushing volume and a rollicking backbeat, which sounds like a recipe for a mess. But the wonder of it was that Ward was just as evocative doing stomp-alongs, especially "Roll Over Beethoven" (which he's been covering for a while to other-worldly effect). Ward's She & Him partner Zooey Deschanel appeared onstage during the encore to run through the Beatles' "Birthday." She didn't do much beyond a few backup vocal flourishes, but it was a cool little star-power moment.
XX Merge concludes tonight with She & Him playing UNC-Chapel Hill's Memorial Hall, and one supposes that the aforementioned Arcade Fire could turn up there. But that's unlikely, and quite frankly unnecessary. XX Merge has been pretty great even without the label's biggest act, and I'm hugely bummed that I missed Lambchop the other night (by many accounts, the best set of the event). So now I've got even more incentive not to miss Lambchop's Nov. 13 show at Duke, on a bill with one of my all-time favorites.
ADDENDUM (7/29/09): Spin's take.