Since I'm using the forum on my phone right now, it's quite a feat. So, I'll just go over the 3 issues OP provided.
1. Giving sMerit to someone should have a limit especially when two person is giving sMerits to each others.
Well it's limited to 50 smerit per month, yea? I don't quite understand this one but there is a limit.
2. For a Legendary member, receiving Merit should have a restriction or (may be just) don't apply Merit for them
You think that legendary members should not be able to recieve merit or..? If thats the case, that's wrong. Merit is there to show the users posting quality, and that even goes for legendary membera since you didn't have to have any quality in posts to reach that rank before merit was implemented.
3. Accounts ever logged in or even has created from the same IP should not be able to merit each other at all.
I believe that ones with the multiple accounts could use browser like tor sp they won't have the same ip. Also, jn some countries you have to pay for static ip, therefore people can just restart their routers and get new ip.