Rumors of a Mercedes-Benz-Aston Martin tie-up first surfaced just two months ago, but talks are progressing quickly with farther reaching partnerships now being discussed at the highest levels. In fact, talks have gone so well that the projected has been renamed from Project Alligator to Romeo and Juliet.

According to Car Magazine, the far-reaching tie-up will be worth at least €300, and will involve far more than just engine swapping.

Although not everyone in Mercedes-Benz’s camp is quite sold on the idea of an Aston Martin tie, Dieter Zetsche of Daimler and Aston’s Ulrich Bez are pushing the deal through rather quickly, with the possibility of the first joint project hitting the road in 2010. That’s the same year Daimler will refresh its Maybach line, a project has now been handed over to Aston Martin. If Aston does a good job with the Maybach re-do, the partnership will spill into more joint projects.

While the early stages of the partnership won’t see any Mercedes products re-dressed as Aston Martins, Mercedes will likely supply Aston with powerplant and transmission. That means that the next DB9 could use Mercedes’ twelve-cylinder engine and the company’s seven-speed transmission. Mercedes’ new hybrid system has also been part of the talks, with the first hybrid Aston Martin expected to make production within the next 10 years.

The second phase of the tie-up will begin around 2012, corresponding with Aston Martin’s re-launch of the Lagonda brand. Although the Lagonda brand will be under the control of Aston, its vehicle lineup will consist of Daimler-sourced models. The brand’s first model will be a luxury sedan, which will be largely based on the Maybach, albeit with mush sportier intentions. A GL-based SUV is also in the works, but Aston will do far less to disguise its Mercedes roots.

Further down the line, Lagonda could offer a four-seat coupe and convertible, both of which would be based on the Mercedes-Benz CL. There’s even a remote chance that the upcoming Mercedes Gull Wing could receive the Lagonda treatment, or that the CL could be re-badged as an Aston Martin DB10.

Stay tuned as more details on Romeo and Juliet are sure to pop up over the following weeks.