Heh, I knew you'll ask exactly these questions. =) If there are any misunderstandings, mod should just ignore them, I think. Or merge in the direction the selection is longer: if selection's vector is (x=6;y=3), I.e. 6 wide and 3 high, then merge horizontally, lengthwise x axis.
I'll try to realize algorithms I mentioned. But it won't be soon enough - preparing for the job interview.
And yes, I'm a fan. %) But not of this mod - I'm fan of things that handify things. And your mod is one of those things. Thank you for it!