How will this departmental restructuring plan affect students and faculty?
One of my former PhD students works in the CISE department at UF, so my opinion is not exactly objective.  But here it is:


Will the quality of education in the CISE department be the same after this restructuring?  Absolutely not.  Teaching computer science well requires serious manpower.  Unless CS courses are limited to a very small number of students, which seems incredibly unlikely for a flagship state university, educational quality will plummet.  The near-certain increase in faculty teaching loads only makes this worse.  If nothing else, with less individual attention on students and more automated grading, cheating will increase dramatically.  (Also, in the longer term, educational quality will suffer because the instructors are not themselves active researchers.  Computer science changes fast; if the faculty aren't leading that change, they'll fall behind.  Obviously.  But in the short run, the removal of TA support is a much bigger issue.)
Can [CS] research take place in [an ECE] department?  Maybe, but probably not at existing levels.  If faculty treat the incoming CISE faculty as anything less than full-fledged intellectual peers who should be judged by the standards of their own research communities (as opposed to ECE community standards), then no.  Most recent CS-EE mergers have failed for precisely this reason.  This has far less to do with the distinction between "software" and "hardware" than cultural differences about intellectual values, publication standards (conferences vs. journals), funding, intellectual property, entrepreneurship, and the like.
Do you think [teaching] professors will remain at UF given the circumstances?  I expect some faculty will stay, either because they prefer teaching anyway (or even support the restructuring), or because they have eternal constraints that make moving impossible, or because they are close enough to retirement that they're willing hold their nose for a few years, or perhaps because their recent research records are not strong enough for them to land a tenure-track position in a comparable department.  But I would expect most CISE faculty—including the research faculty forced into other departments—to leave at their earliest opportunity.
Will the teaching-only CISE department be able to attract quality professors?  Not as easily, and not as long as the current political players are in power.  Setting aside the common assumption that quality is correlated strongly with active research, I expect most strong teaching faculty would have trouble accepting a position from a college with such blatant disregard for academic freedom and shared governance.  
Top students?  Undergrads, yes, although probably in smaller numbers.  Because UF is a flagship state school, it attracts a significant fraction of the top high school graduates in the state (at least by STEM standards).  The number of such incoming students is unlikely to change very much, but many of those students who would have studied computer science will go into other majors instead.  Graduate students, probably not, for the same reasons as faculty.


And one question you didn't ask:


Will employers value a UF CISE degree as much as they do now?  I doubt the restructuring would have a significant effect on the job prospects of current CISE majors, except possibly if some of the software companies who've recently announced plans to open offices in Gainesville change their mind.  But if the quality of education (and the strength of incoming majors) suffer as I expect they will, then a UF CISE degree will be less valuable than it is now, even for the best students.


The flagship state university where I work has attempted a few similar restructuring efforts, and currently faces similarly severe budgetary constraints.  Some of the resructuring attempts were successful (for example, our Theoretical and Applied Mechanics department was recently merged into Mechanical Engineering); others were not (for example, our Nuclear Engineering Department survived a proposed closure).  In the years leading up to the TAM closure, a significant majority of the TAM faculty moved or retired.  Although TAM survives as a degree program within our MSE department, it attracts considerably fewer students and faculty than it did as an independent department.