Let's say that two dreamselfsprites fuse into one ^2 sprite. What would happen if the living versions of those players ascended to god tier at the same time?

Depends on whether Skaia considers them still two individual beings merged, or if the Sprite Squared status grants them the status of being a single, new person. Wouldn’t ascend if it’s the latter, likely, and would likely just ascend one of the two if it’s the former.