(Let's call the whole thing off...)
A reader has asked me to explain the differences between Theravada and Mahayana. Reading the following, you should bear in mind that my knowledge of Mahayana is limited, and that, let's face it, I'm biased.
You should also bear in mind that Mahayana is a catch-all category which includes schools as diverse as Zen (in several forms), Pure-Land (ditto) and Nicheren. Many of these schools are as different from each other as they are from Theravada. What's more, Theravada itself comes in different flavours, primarily along national/ethnic lines, although the differences aren't so great.
Historical - The Buddhist community began splitting into distinct sects after the Second Council; one hundred years after the Buddha's Parinirvana (death.) The initial split was between the Sthaviravadins and the Mahasangikhas. The former were the traditionalists, and the spiritual ancestors of Theravada. The latter were actually the majority at the Council (Maha-sangikha means "the big group") They were not (yet) Mahayana, but developed in that direction over the centuries.
There survives two very different accounts of the Second Council; which seem to represent the two factions. One version is found in the Theravada Vinaya texts and describes the split as being entirely over points of Vinaya (disciplinary rules for monks) with the Mahasanghikas being those who wanted to loosen up the rules and the Sthaviravadins being those who wanted to retain the purity of the Buddha's law.
The Mahasangikha version, which survives only in Tibetan translation, makes out that the split was over issues of doctrine, not mentioning discipline at all. Perhaps it was a bit of both. Theravada to this day is more insistent on orthodoxy in Vinaya than in Sutta interpretation, at least in Thailand. So it is perhaps not surprising that they found such innovations as the "two-finger allowance" (eating after the sun's shadow had passed mid-point by the width of two fingers) and the "salt-horn allowance" (storing salt for use with the meal in a horn) as more siginificant than odd theories on the nature of the Buddha and the Arahants.
Because that is what the contested doctrines in the Tibetan version are concerned with. There was steady tendency in the schools derived from the Mahasanghika faction to elevate the Buddha to god-like status and to downgrade the status and attainment of the arahants.
This is seen in (later) Mahayana texts like the Vimilikirti Sutra where Sariputta is reduced almost to a figure of fun; a foil for the superior Mahayana wisdom of Vimilikirti.
But the full-fledged Mahayana didn't appear in India until at least three centuries later. It is hard to date precisely because it's formation as a distinct school (or group of schools) was gradual, and because chronology was never a strong point of Indian civilization.
It is important to note also that the Sthaviravada itself split into various schools and that the Theravada was only one of them. It was at no time the dominant school in Northern India but was firmly established in the island kingdom of Sri Lanka, which historical circumstance allowed it alone of the early schools to survive the Muslim onslaught starting around 1000 AD.
Textual - The Theravada maintains as canonical a large collection of books in the Pali language. Scholars agree that most of this material can be safely dated to at least the Second Council time. Theravada holds that these texts alone are genuine Budhha-word.
The Mahayana has a large collection of additional sutras in Sanskrit. These began appearing around 100 BC (at least four hundred years after the Buddha). Many of these texts contain new doctrines not found in the Pali. Orthodox Mahayana belief is that the Buddha gave these discourses to a select group of disciples to pass on in secret until the time was ripe to reveal them. Caveat Emptor.
These texts include the Prajna-Paramita literature, the Lotus Sutra, the Vimilikirti Sutra and many many others. There does not seem to be any well-defined closed canon as in the Theravada.
Doctrinal - Many of the core Buddhist teachings are common between all schools - The Four Noble Truths, the Eightfold Path, the Dependent Origination. The principal point of divergence is in the goal of the path.
The early Pali texts always speak about the attainment of arahatta as the goal. The arahant is one who has destroyed all defilements, and thereby gained an unshakeable vision of the Unconditioned (Nibbana.) After death, the arahant is not reborn. "The task is done, the burden laid down." The realization of Nibbana is the same for the Buddha and for the arahants. The Buddha is special only in that he is one who has attained perfection in all the paramitas. He also has a greater depth of vision, for example being able to fully recall all his past lives. The Buddha also will not be reborn.
The Mahayana critique is that this amounts to a selfish goal - you get yourself out of here and leave the rest of us to muck about, thanks a lot. So they developed the concept of a Bodhisattva - one who deliberately chooses to be reborn into this world to help others. From this difference, other ideas derive. For instance some schools of Mahayana add a complex array of Celestial Bodhisattvas to the cosmology - beings like Manjushri, Bodhisattva of Wisdom and Avalokiteshvara, Bodhisattva of Compassion.
Nomenclature - There remains to this day a big confusion over the terms Hinayana and Theravada. These are not synonyms.
To begin with, the term Hinayana is perjorative, and was coined to be so. Hina doesn't just mean little; it means something like inferior or lesser. The early teachers of the new doctrines coined the terms Hinayana and Mahayana to assert the superiority of their beliefs. The Greater and the Lesser Vehicle.
Another important point is that all the early schools were categorized as Hinayana in Mahayana polemics, not just the Theravada. This has led to at least two problems.
One issue that creates difficulties between the schools is that at lot of Tibetan literature contains criticisms of the errors of the Hinayana. Now, when the ancestors of the Vajrayana were starting up in India, the "Hinayanists" they encountered would have been mostly Sarvastivadin, not Theravadin at all. Fast forward to the 20th and 21st centuries and the dawn of political correctness and many contemporary Vajrayana writers decide to be polite and use "Theravada" instead of "Hinayana" but otherwise leaving the critique the same.
I always cringe a bit when I read some well-intentioned Vajryana writer asserting that "Theravada" understands the emptiness of individuals (anatta) but not the emptiness of all dhammas (sunnata). There are in fact several passages in the Pali Canon that teach just that. I don't know for sure what the Sarvastivadins said about the matter, but we don't hold to what the Vajrayanas say we do. It is to be hoped that greater contact between the schools will correct this in due time.
A lesser problem is one that primarily concerns scholars of Buddhist history. What word do we use as a category name for all the pre-Mahayana schools? Traditionally we have used "Hinayana" but this is to use the insulting title given by their intellectual rivals. Some scholars have suggested "Sravakayana" (way of the disciples) but this is confusing because the term has a technical meaning in Theravada already. One suggestion, which I believe originated with Dr. Sugunasiri, is "Adhiyana" which means Early or Original Way.
There is more than could be said on this topic, a lot more, but this is already a very long post. I may blog some more about the various schools.