It's probably a given that ALL moderators and staff members are merit sources. Along with other people the Theymos or those said moderators (or cyrus) know to be good posters and good assessors of the quality of posts also.
"You are a merit source. The next XXX merit you spend will come from your source rather than your sMerit balance. Merit spent from your source will come back in 30 days. Unused source merit is wasted. It is not allowed for merit sources to sell their merit."
I found this quote slightly disturbing - it would tend to imply that others who are not merit sources are allowed to sell their merits. That rather kills the whole concept.
I agree there should be a complete ban on everyone selling/buying merit and everyone found to have done it should face some sort of ban as a result (and not be able to use any more merits).
As a separate point, does anyone know if sMerit can be gained thorugh activity increasing? E.G, every 14 activity you get a merit or is it just when you get merits that you get a 50% sMerit?