A very interesting question. Also one that cannot have any definite answer.
To the first part of your question; will we become one with everything?
We already ARE everything, and one with it. There is no separation.
Will we retain consciousness? Well that depends on your definition of consciousness.
There is the kind of consciousness where something reacts to the environment, and the kind where there is a subjective experience, the feeling of things. These may be the same; for example, a tree reacts to its environment, but does it have subjective experience? awareness? I cannot say, I can ask the tree but he/she cannot answer me. There is also “big consciousness” the activity of the universe, the ocean that the island of “you” rises out of. It is everlasting and eternal. Parts of it are aware, the entire thing is aware on some level, and it just is.
I think that the experience that we call “consciousness” is a property of systems that undergo constant multi-layered self-interaction. The most common system that possess this property on this planet is nervous systems. These cells communicate with each other very quickly, and construct a system that mimics the environment. So a jellyfish (with only a simple nerve net) is probably “conscious” as in it is subjectively aware of things, experiences things and responds to them. The sensory organs of a jellyfish are rhopalia, which include statocysts (gravity receptors), and simple light receptors. The conscious awareness of the jellyfish can only extend as far as its senses. It can feel “I am tilted” “I am upside down” “it is dark” and so on. Each organism is limited in its experience of the environment by the number and complexity of its sense organs, and the neural matter that processes them.
Humans have very complex sense organs and much more complex systems for interpreting them. The human brain runs a realtime simulation of the external world corrected and guided by inputs from the sensory system. For example, most of the vision in our periphery of our vision is generated inside the brain, with minimal input from the eyes. In this way the human brain is coupled to the external environment through the sense organs. Sometimes when the part of the cortex devoted to vision is destroyed (by a stroke) the person does NOT experience blindness. There is a distinct lack of awareness. Despite obvious evidence, they deny that they are blind, and confabulate alternate explanations to explain their condition. This is called Anton–Babinski syndrome. It provides evidence that consciousness is modular and occurs in different areas of the brain. Visual consciousness in one brain area, feeling in another, and so on. The experience of an “I”, a singular experiencer of events, is a perceptual illusion generated by the brain. There are only brain areas coupled with the environment or each other, their interaction generates awareness.
For this reason I do not expect the awareness of little me to exist after the activity of my brain ceases. Many people feel that a human soul is some some solid, independent, everlasting thing, but I am reasonably sure that it is a transient property of interacting atoms. After my death my atoms will be recycled by other organisms and become part of other things, just as my atoms right now were previously other things. Upon death the only “I” that ceases to exist is only a limited human concept of I, not the real I. The real I is the entire universe. Death is the only the death of the ego, the universe lives on forever.
I am aware that this is a very mechanistic view of a phenomenon that we know very little about. Consciousness intrigues me no end, and as much as I would like to understand how feeling arises from matter, it is unknowable, untestable, forever a mystery. I am not sure of my conclusions, and if I am wrong I will be pleasantly surprised =)
I would also like to add that once you treat any supercomplex self-interacting system as conscious, the number of conscious objects increases exponentially. I believe that any group of communicating cells is conscious. This includes not only organisms with nervous systems, but all multicellular organisms. I believe that plants and trees, fungi, tiny colonial protists, and groups of bacteria are all conscious. Other systems may also be conscious are; hives of bees, ants or termites, viruses, the nuclear material of an individual bacterium, the internet, ocean currents, the earth (certainly), stars and planets, and even galaxies.