This is helpful. Merging makes sense. Ideally, feels to me like this should be hidden from users and just default to the better encryption (although, maybe there is some debate on that point?). But I guess if you default to 44 and some clients don’t support it, then that is a very bad UX too. So then perhaps separating these out and forcing users to actively choose makes sense? This is definitely a sticky issue.

I guess it's a problem to have no signalling which nips are supported by the recipient. Many users are on Damus only and might find the DMs much later if at all.

I had earlier suggested to have a profile field that signals readiness for certain nips but maybe much more helpful would be to signal when a certain nip was actually last used. Instead of me trying out some obscure client once resulting in my profile getting amended with a claim that I now support some obscure feature forever, show "Leo used nip4 recently" or "Leo never signaled to have used nip44 ever. Consider asking via nip4".

While nip4 sending is already trivial to detect for third parties, reading or nip44 is not. As an instant read receipt can be a privacy issue, clients should not signal this instantly or granularly but some daily update on messages being read could be ok from a privacy perspective. It could be updated even absent new messages, so it would signal more the use of a client than the reception of actual messages.