If you use the coverage checker on www.three.co.uk it shows that ALL the UK has a signal for Voice and Photo, but video is limited to built up areas. (e.g London, Birmingham Bristol).

Does a "three" 3G phone make use of the existing 2G "GSM" networks when its own signal is not present.???
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Yeh, Three uses a 2G (O2s) network when its own 3G network isn't present.

The main problem is with call handovers, calls that are using the 2G (O2s) network can handle moving in to a 3G area well, they just carry on using a 2G (O2s) network. Going the otherway isn't so easy though, and at the moment any call made on the 3G network is dropped if you move to a only 2G (O2) area.

why o2 i thought orange used to be called hutchninson telecom and it is hutchinson 3g

Hutchison sold Orange to France telecom for an astrinomical amount of money a few years ago. Which is why they have the money to set up three.
Rumour has it they still have enough left over to put a serious bit in to buy o2, so the tie up may be part of that, or more likely a completely innocent business decision