This thread over at ls1tech might be of some help. The biggest differenct I can see between megasquirt and the stock PCM is that megasquirt utilizes batch fire injection, whereas the stock PCM is sequential, which allows much greater control over low speed fuel delivery. This is how they can run those big cams and still manage to idle. I know this also helps somewhat with emissions, and probably with economy as well.
As far as displacement on demand, If you're referring to the LQ4/LQ9 engine, I don't believe that feature is available on those engines as from what I can remember some type of hydraulic mechanism was used to disable exhaust and intake valves in unused cylinders.
I'm kind of in the same situation as you. I'm researching the possibility of a 6.0L swap and looked into the megasquirt as a cheaper alternative to a factory PCM, wiring harness, and tuning software. It appears that most everyone running Megasquirt on an LS1 is running it along side the factory computer though, although control of the 4L60E trans through megasquirt looks like it isn't too far away.