I have a client that had a money purchase plan which was merged into an existing profit sharing plan. Now he wants to terminate the profit sharing plan and start a SEP. With the new portability rules, have the successor plan rules changed? Can the assets from the PSP be transferred automatically into the SEP or do we have to go through a distribution/rollover process and get participant and spousal consent for the transfer of assets into the SEP?

A SEP is not a successor plan. Generally, participants may roll over distributions from the QP to the SEP-IRA.

So, is it as I feared, and I must get spouses to sign off and their signature notarized for each participant [to] rollover from the QP to the SEP?

If that is what's required for the distribution, then you are correct.

Breakpoints aside (e.g., if mutual funds), what difference would it make what participants do with their distributions (e.g., including IRA to Roth conversions)? Perhaps a J&S annuity?