I highly doubt they would stop supporting ATI. It wouldn't make sense, as no developer would use it then. They will most likely just integrate certain aspects of it into it that only Nvidia cards will run faster and more efficiently. But these could ultimately be left as an option in your game, I'm sure the base instructions would run fine across the board.

Anyways, the current free version of PhysX that works with all hardware setups is a step above what's in A7 right now. I don't know how hard it would be to implement it into A7, I haven't really the time to check it out yet, but perhaps Conitec would consider it for the near future. I don't really see why not...