The ability to have one application.ini file source another one via the config directive is working fine with proper merging now as of Zend Framework 1.8.1.

However, config file referenced via the config directive do not have their array keys cast to lower case, which is the first thing setOptions does with the config file that contains the config directive (I know this sounds confusing, but I have a patch against the subversion repository that fixes this). If you have the following scenario:

ini #1

config = "ini #2"
includePaths.path1 = "some/path"

ini #2

includePaths.path2= "another/path"

One would expect the resulting array to be something like:

array(
    'config' => 'ini #2',
    'includepaths' => array(
        'path1' => 'some/path',
        'path2' => 'another/path'
    )
)

In actuality, however, what you end up with is:

array(
    'config' => 'ini #2',
    'includepaths' => array(
        'path1' => 'some/path',
    ),
    'includePaths' => array(
        'path2' => 'another/path'
    )
)

I have a simple fix for this issue that I will post to this issue once I figure out the best way to attach patches to an issue (this is the first issue that I've filed in the Zend Framework Issue Tracker, and I'm not too familiar with the JIRA Issue Tracker software).