For me, BC does a better job of keeping two files in sync. And, if you’ve moved whole sectiions of code, you can manually resync at the lines you indicate. Cool. And it uses color-coding to indicate character differences within lines – that makes it easy to spot differences. When I’m not editing or only want to transfer lines from one file to another or delete lines, BC is great. If another programmer is sitting down with me to review my code, it’s fantastic. But, as John said, editing is a pain.
You can’t beat the side-by-side ME compare for doing extensive mouse-free editing at the same time you’re comparing. When I trigger a compare from ME, and BC pops up, I still bounce back to ME for faster edits. And ME and BC are well-enough behaved that they keep the two views of the file(s) in sync.
Tim has announced that BC3 will feature a full-screen editor. (And 3-way merging! – although that’s off topic.) I’m hoping, wishing, keeping my fingers crossed that it is based on some version of ME.