In case you’ve been held incommunicado for the last few days, Yahoo’s twice-delayed stockholders meeting, which it pushed off until the end of July after legendary corporate raider Carl Icahn threatened a proxy fight for control of the board, is now scheduled for Friday, August 1. If things get that far, it promises to be highly entertaining.

Fortified by court disclosures Monday of Yahoo “sabotaging” negotiations and running Microsoft off, Icahn maintains that the only way to “salvage” Yahoo is to sell it to Microsoft and the only way Microsoft is ever going to come back to the table is to dump the Yahoo board, starting with CEO Jerry Yang, who he wants fired. No, make that FIRED.

Carl told CNBC he’s got “good odds” in the proxy battle.

But Reuters says it’s heard from “a person familiar with the matter” that Yahoo and Microsoft are trying to come to terms on that rumored deal for Microsoft to buy Yahoo’s search business and that discussions could wrap up “in the next week or so” – which would seriously upset Carl, who wants Microsoft to buy the whole enchilada.

Ah, but ever since Microsoft couldn’t cut a sweetened deal for $33 a share on May 3, it’s apparently turned prickly and standoffish, saying it’s no longer interested in acquiring Yahoo while still keeping the option open.

For Yahoo’s part president Sue Decker claimed Wednesday that talks with Microsoft are still “ongoing” and “engaged.” Leading where she left unclear. “There are many ways in which a combination with Microsoft could be very beneficial,” she said. Yahoo is also still talking to Google.

Otherwise, we are supposed to understand that Yahoo is being “completely rewired,” as she called it, on the sales side; that they’ve got new ads deals with Walmart.com and CBS and others; and that they’re closing the gap with Google though no independent numbers suggest that.

Carl, meanwhile, got a lot of scope to lash out at Yahoo from those court disclosures Yahoo didn’t want to get out.

They stem from a suit against it brought by two Michigan pension funds invested in the firm that repeated press reports that Yahoo rejected an unpublicized Microsoft’s offer of 40 bucks a share in January of 2007, when Yahoo’s stock was in the mid-20s like now.

That makes the Yahoo board look like a bunch of Yang toadies even if Terry Semel was running the joint back then. The company publicly claims to be unaware of any $40 offer.

The suit seeks to get the company to drop its takeover defenses and charges that Yang structured what is basically a “scorched earth” severance plan that could have cost Microsoft $2.1 billion-$2.4 billion – depending on whether it paid $31 or $33 – and, in the end, would have left it without much in the way of Yahoo staff since all 14,000 Yahoo folks were incentivized to quit and claim severance benefits.

They just had to be reassigned to a new job or have their responsibilities “adversely altered” within two years of a Microsoft takeover to qualify.

According to the court documents, Yang’s severance experts advised against such a move and it looks like the president of Compensia, the outside consultants Yahoo hired, called the plan “nuts.”

Yahoo however says the remark is out of context – due to redactions – and actually refers to a Yahoo cost estimate that assumed its entire workforce would leave if Microsoft bought the place. Elsewhere the Compensia guy testifies that Yahoo management figured 15% would leave.

Yang, meanwhile, has been discovered to have had a press release drafted rejecting a Microsoft offer four months before Microsoft’s unsolicited $31 offer.

It also turns out that the day before Microsoft made its $31 a share offer public on February 1 Yahoo management rejected the idea of outsourcing search advertising to Google for fear Google would become a monopoly. Its reservations didn’t last long given the subsequent Microsoft-distancing Yahoo-Google test and posturing.

As Yahoo feared Carl has been using these revelations to call for Yang’s head on a platter. He wants him out as CEO.

“It’s no longer a mystery to me,” he told the Wall Street Journal Tuesday, “why Microsoft’s offer isn’t around. How can Yahoo keep saying they’re willing to negotiate and sell the company on the one hand, while at the same time they’re completely sabotaging the process without telling anyone.”

He said he was “amazed at the lengths that Jerry Yang and the board went to entrench themselves in this situation.”

Icahn however didn’t really hit his rhetorical stride until Wednesday when he sent an open letter to Yahoo chairman Roy Bostock demanding that the severance plan be scrapped.

“Until now,” he (or his ghost writer) wrote of the plan, “I naively believed that self-destructive doomsday machines were fictional devices found only in James Bond movies. I never believed that anyone would actually create and activate one in real life. I guess I never knew about Yang and the Yahoo board.”

He holds the plan responsible for Microsoft dropping its bid for Yahoo. “It is insulting to shareholders that Yahoo for the last month has told us that they are quite willing to negotiate a sale of the company to Microsoft and cannot understand why Microsoft has walked away. However, the board conveniently neglected to inform shareholders about the magnitude of the plan it installed which made it practically impossible for Microsoft to stay at the bargaining table. Could this have been the problem?”

Dismantling the “poison pill” plan is the way to a higher price, he claims. “One doesn’t have to be a rocket scientist to realize there is a simple method to possibly achieve a higher price. Simply rescind the poison pill ‘severance plan,’ which would free up approximately $2.4 billion and possibly even more which could be added to the bid.”

But Yang and his board would still have to go because they’ve lost Microsoft’s trust.

According to Icahn, “Even if by some stretch of the imagination the Yahoo board finally determines to do the rational thing and sell the company, I fear that, in light of Yang and the board’s recent actions in response to Microsoft’s overtures, it may be too late to convince Microsoft to trust Yang and the current board to run the company during that period while Microsoft sits on the sidelines with $45 billion at risk. Therefore, the best chance to bring Microsoft and Yahoo together is to replace Yang and the current Yahoo board with a board that will negotiate in good faith with Microsoft and in whom Microsoft will have trust to operate the company during the long period between signing and closing.

You stated in a press release yesterday that, ‘Yahoo’s board of directors including Jerry Yang has been crystal clear that it would consider any proposal by Microsoft that was in the best interests of its shareholders.’ However this is not crystal clear to me. You have allegedly turned down a $40 offer. You have turned down and sabotaged a $33 offer. Instead, you appear willing to negotiate an ‘alternative’ deal that in my opinion will be worth less than $33 but will entrench the board and Jerry Yang. I understand how these actions are in the best interests of management and a board whose members each receive $40,000 per month for several days work, but it is hard for me to understand how these actions are in the ‘best interests of the shareholders.’”

Yahoo, in response, maintains that Microsoft walked strictly over price. Microsoft offered $33 a month ago, Yang wanted $37. It says it’s “patently untrue” that it reject $40 a share, protests that it’s “reached out to Microsoft proactively” but Microsoft is no longer interested in a full acquisition, and claims Carl’s letter “seriously manipulates the facts” and incorrectly describes its “employee retention plan” as a “poison pill.”

Yahoo, by the way, which continues to claim in the face of Icahn’s cynicism that it was always willing to negotiate any proposal from Microsoft that was in the “best interests of its shareholders,” told the SEC Tuesday it expects to spend $12 million trying to block a proxy upset.

Trying out one of his defenses in his letter back to Icahn, Bostock remarks that “Your stated view that ‘the only way to salvage Yahoo in the long run if not the short run is to merge with Microsoft’ demonstrates that you have no other plan and causes one to wonder what exactly would happen to our company if you and your nominees were to take control.”

According to what Yahoo told the SEC if five of Icahn’s boys are elected, the top five executives at Yahoo are entitled to a change-of-control severance package worth a total of $24.7 million.

Oh, yes, and the Federal Trade Commission has cleared Icahn to buy up to $2.5 billion in Yahoo stock.