1.I think the lower ranked members is never going to rank up to legendary.
In more than 2 years, if you actually contribute, you should have no problem reaching 1000 posts that have been given 1 merit, 500 posts that have been given 2 merits, etc.
2.Soon there maybe a merit farming.
Merits are finite. Those that want to sell merits will run out very quickly, unless they have a huge army of accounts, and you can't farm them by making new accounts. Merits are also public, so if people with all one liners somehow get 100 merit, the community can spot them and give them a negative trust if needed.
3.I am sure that not all the quality posts will get merits.
Well, yeah. You can't expect people to be seeing every single post, and this is really only a problem if you really want to rankup, but basically post spam, and in an attempt to do so, make a single high quality post. People who consistently post quality should be rewarded.
4.Mods,DT,merits sources are exchanging smerits between them.
Almost every moderator is a Legendary member, so gaining merits would not help really. There is no reason for mods, DT and sources to trade merits, as they are usually Legendary, post good quality, and contribute.