This is really an excellent thread and I couldn't stop reading through all of it. We need more and more threads like this and if they'll come I will start to be more optimist about the possibility of the Merit rules to be really effective in the way they were thought.
I can't apply for your merit distibution since nowadays I'm more an altcoin person, and anyway I'd need 250 merits which are unachievable so I've decided I'd stop to care. I became an altcoin person since I've missed the boat of Bitcoin. I've stumbled in Bitcoin in the spring of 2010 and I've got very excited by the project and planned to delve deep into that. What then happened is that I left for a trip and me being twice the age of most of the people in this forum, my memory is not what it had used to be and when I came back I had simply forgotten about Bitcoin. I then tried to jump on the Bitcoin boat in January 2014 - started to study the issue 18 hours a day, bought Bitcoins ATH just before a long bear market (which led me to explore altcoins, which led to new disasters) then I bought a few BTC ASICS which never ROIed (one soon broke while the Swiss company which had produced it had just gone bankrupt), got coins stolen from 4-5 exchanges (Mintpal, Crypsy, Allcrypt, etc) and worse then anything I realized that 90% of whatever was happening in cryptospace were just scams or Pump&dump schemes and so after 6 months I left the whole field broke and in total disgust (otherwise I'd be Legendary by now, BTW, and probably very rich as well). One can spot my idealistic and unfitting early approch to this world by my very first posts on BCT. But I digress.
If fact, the reason of this post is because I have felt the need to comment your following statement:
I believe every time another altcoin is born it dilutes bitcoins user base slightly
In a way I think it is far worse than that. Even though a few altcoins with revolutionary features add real value to the whole sector, and even create an echosystem which as such is more solid than Bitcoin alone, the moltiplication of altcoins with similar features are in a way violating the rule number one of Bitcoin: the finite number of coins which will ever exist. This is especially true for forks like Bitcoin Cash, which de-facto double the quantity of "Bitcoins" in circulation. Of course they are not real Bitcoins, but since someone considers them to be Bitcoins, in a way they are. These clones not only dilute bitcoin's user base, but in fact they create money "out of thin air" - which essentially violates the rule number one (or two) for which Bitcoin was born. Bitcoin Cash's 27 billion USD capitalisation was created out of thin air just by forking a blockchain. Multiply this for all redundant altcoins which continuosly are coming into existence, with the pseudo-capitalization of the whole sector spinning out of control, and you get the picture of the looming disaster.