2) My recollection is that we talked about it around a year after Chrome was released.
Chrome Beta release date: September 2, 2008
Date of WebKit2 announcement: Thu Apr 8, 2010 (after <1 year of development)
I don't have records of the meetings where we walked though.
3) Does the reason for saying no affect whether our choice to make our own thing was reasonable?
This is somewhat moot with 1) and 2) being the case (or at the very least strongly perceived to be the case on your side). At any rate neither side being able to settle on a single version of events signals a communication problem, which makes the whole value of this hypothetical joint undertaking fuzzy anyway.