Need to give away Milestone that's rooted, what happens if I do Factory Data Reset? In Settings -> Privacy -> Factory data reset?

I don't mind giving it away rooted, but if it wipes out the Superuser application (hence allowing any app to enter root mode unchecked) would be very very bad.

If it erases that app while leaving it rooted, can I just re-download the .apk and reinstall it afterwards? Or does that procedure unroot the phone? That would be OK too.

It's a Milestone 1 with Motorola's official 2.2 update. I just rooted it so I could use the ClockSync and Screenshot apps.
Depending on the device (and root method), the su binary (which gives your device root) is usually located in /system/xbin/ or /system/bin/ directory, while the Superuser.apk (which acts as a gate keeper, presenting you with a dialog when apps request root permissions) is always in /system/app/.  The /system partition does not get cleared by the Factory Reset process, so it's safe to perform while still retaining root.