I think the game will cease level at 100 because that's the standard for FF games (i would say 99, but FFXIV doesn't have a subjob system and usually capstone skills are awarded on the 50/60/70/80 levels, not to mention having a lvl99 cap would be awkward). That said, progression beyond level 100 would probably be something else, like mastery levels or some other form of progression.

Merits would be bad only because it's an illusion of choice. Skill trees are fine in offline games, but as many have pointed out, the merit system in XI was a failure. They're only now after 15 years trying to fix them in FFXI.
As a reminder, in FFXI every job had 5 categories of merits to choose from, ranging from new spells/job abilities to passive traits. Each of the 5 categories ranged from level 1-5, and you had 10 max upgrades. So you could merely unlock all 5 categories at level 2 of their potency, or max out 2 categories to level 5 and leave the other categories locked. Problem was, it was nearly always the case that the most optimal scenario was maxing out 2 categories, and by not doing so you were chastized or unwanted.