Wow, this is also quite subjective
Suppose someone wants to become a source of merit, but they don't have much merit to distribute before, so their history of distributing merit seems to be empty. It means that only those who regularly receive merit can apply to become another source of merit. On the other hand, the quality of distribution is also difficult to evaluate, because according to theymos, merit is distributed according to each person's thinking, there is no real standard to evaluate it.
Well of course, its a human that's reviewing the cases, and therefore there will always be the issue of being subjective. There might be a individual reason for distributing merit, but its fairly common sense to see if someone is abusing their merit distribution or giving merit as a way of "liking" someones comment rather than giving it because its a quality post. However, the admins (or perhaps just theymos) have far more data that they can evaluate than the average user, and therefore they can piece together a strong case of why someone should be a merit source, and why they shouldn't. Plus, being subjective isn't always a bad thing. theymos probably has a good idea of how he would like merit sources to distribute their merit, as of my assumption he was the one to implement the merit system, and therefore he definitely has some sort of view of how it
should work.
There quite possibly may have been cases especially in the local section where users were given the merit source title without looking at their merit spending in great details, possibly because they're one of the most active users within their local section, but I'd say that the vast majority if not all are evaluated on how much they've spent, where they spend it, as well as how much they give per post.
Its similar to how the admins select users to become staff. They look at the data that is available to them, and then approach them. Unfortunately, the fact of the matter is without gaining merit yourself, and distributing it there is no way of determining whether a user would be a good judge of quality posts, because as we all know just because a user is a good poster, doesn't mean they are a user suitable as a merit source. This doesn't necessarily mean they have a zero percent chance of becoming a merit source, it just might make it harder for them to be selected if there are other candidates with merit spending in similar sections of the forum.