lets say there are two AD forests which by coincidence happen to have same name, for example "foo.local". Is it possible to establish a trust relationship between such forests?
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I really doubt it, but more to the point, I'd strongly recommend against it. Even if technically it works it's going to be so horrendously confusing to diagnose issues that I would never even entertain the idea.

Dan
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Have to agree. I really can't see this working. For a start, just imagine the potential confusion in DNS namespace. – Rob Moir Oct 07 '11 at 10:29
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1I agree that DNS is the main issue here. Any way to overcome it? – rocku Oct 07 '11 at 10:31