If you have legendary (any quality) chests, when you merge, they lose their quality.

Thanks for report. Very low prio. Chest quality only increases HP, so I can't imagine anyone actually improving quality of chests.

There is also question what should I do when merging chests of different qualities. I'd most likely use minimum quality of all merged chests.

Will disabling Quality cause issues? I plan to use the "no-quality" mod.

No, this mod completely ignores quality, so as far as it is concerned there is only "Normal" quality

Thank you.

Just to chime in, Quality actually also increases storage capacity.

By the 2.0.20 version, yes !

Well, crap...I'll check it out later

Oh, as for mixed qualities - I would handle that like anywhere else in the game, and not allow it?
Or do it like you said, overall lowest = level of returned chests.