Keep it. Make sure it gets correctly positioned in the coming months.
It appears that with the Oracle acquisition, the reason-to-exist for Falcon is regarded as gone (a non-Oracle-owned InnoDB replacement), previously seen as a strategic imperative – much delayed though.
But look, each engine has unique architectural aspects and thus a niche where it does particularly well. Given that Falcon exists, I’d suggest to not just “ditch it” but have it live as one of the pluggables. What Oracle will do to it is unknown, but Sun/MySQL can make sure of this positioning by making sure in the coming months that Falcon works in 5.1 as a pluggable engine, perhaps also creating a separate bzr project/tree for it on Launchpad.
Then the good work can find its way into the real world, now.