Since I am not a "formal" member of the gallery team I can not speak officially, but I would say that Yes the gallery module will be moving to DNN 4.x.
From what I see: I have already converted the existing code and have it running in DNN 4, along with showstopper bugs fixed so that the module is usable. On a parrallel path the team is converting the module to use the database. Once they are done, the two will be merged. A new gallery, in DNN 4, with bugs fixed, and using the database.
As for the source to my changes, yes it is available--in fact that is the only way that I am distributing it, I have NOT compiled it AT ALL. (ASP.NET 2.0 compiles on demand)
As for upgrading your DNN site, that shouldn't really depend on the gallery module. Convert your site to DNN 4 using the DNN documentation, then either continue running the beta gallery module--or even better, install my fixed version.
I hope this convinces you to upgrade to DNN 4 !