I had to skim through, but from what I gathered the main thrust of the OP's argument is that a server merge would look bad.

Now I know this is going to make some peoples' heads spin.... but I don't think it matters one little bit what the game looks like.

What Matters... is that the game is good. If the game is actually good, then it might look good, and then it might attract new players AND they might stay. This formula for success relies on one single aspect though... delivering a good game.

So, in that context, when asking whether a server merge is a good or bad idea.... I think is debateable.

I don't think there's any reason to server merge, as most content is based on groups of 4-8. The only serious consequences are economic... and those always work themselves out. So... imo I think a server merge is more hassle than anything for the devs, although it may cut costs down, but I'm not an expert in that regard.