It's going to be interesting to see how Federer reacts to this new situation with him not being number 1 anymore.
Indeed. So far, he's been handling it very well I think - giving Rafa all credits for his awesome run this year and at least not showing that he's all too disappointed. I have no doubts that he doesn't at all show his true feelings, though.
Will he get more motivated and dominate everything next year to regain his throne, will he fade away in the rankings slowly or will he decide to retire in the next 2 years?
The way his form is right now, I can't see him getting back to his dominating form of old, but I do believe he'll try and fight back and remain, or rather, return to be a force to recon with. Nobody gave a penny for Agassi any more when his ranking faded to the level that he even had to play challengers to get back - and we all know how that story ended. I hope Roger will follow his example.
If he decides to retire, I don't think it will take him two years to decide so. All I can hope for is that he doesn't pull a Borg/Henin all of a sudden... that would be real sad for all who love the sport.