my suggestion: release something that works on older branches and then move development to the newer one (of your choice) ...if someone else is interested in maintaining backwards compatibility I'm sure there is someone willing to help with maintaining the code :)

by the way, I have downloaded and played with the widgets but not using them yet. I can see them as useful but they would be more useful if easily integrated (or merged) with firefox codebase

I agree with monkey.
Branch, and branch often.

I would freeze what you have now working for 1.8.0 as well as 1.8.1

then have your trunk be for 1.9.

You also have the advantage that not many people are using xul widgets yet, so you can do this. And as monkey said, if someone wants a feature you implement in the 1.9 trunk for 1.8.x they can back port it and offer you a patch.

Well, until they get extension dependencies working well, I know I won't be terribly interested in bringing your code into my extension (too much effort). However, once they do get that working, I can see extension authors (myself included) using the widget code a lot more. If I'm not mistaken, that isn't planned to be fixed until 3.0, so I would say just make it work with trunk.