I think this guy has the tools to becoming the lightweight champion. I personally think he would beat Sherk. I'd say Sherk would get the first couple takedowns based on a good shot and a strong finish, but aside from shooting, Edgar appears to be the better overall wrestler. I think he could outwrestle Sherk and win a decision.
I'd also match him up with just about anyone at lightweight right now. I think it would be difficult for other 155ers to deal with his non-stop scrambling. The UFC is filled with second and third rate wrestling, watching a guy like Edgar is a breath of fresh air. He reminds me of a lightweight version of Randy Couture.
P.S. I exclude BJ Penn from everything I said above.