Ouch!  I had digaran on ignore for the longest time, as he tends to write in these disjointed, jarring sentences that I have a hard time reading--but I took him off when he started with the biting sarcasm.  I agree that in this case it's not appropriate, it's insulting, and it's mean-spirited.  But bitcointalk doesn't censor these things, which is refreshing in a way.  

If I were you, I'd just follow the suggestion already given:  Put him on ignore and go about your business as usual.  I wouldn't take the things said about you seriously, because they're written in such a trolling manner.  The merit sales thing is a bit more disturbing, and I hope that as a merit source he's not being serious about doing that.  Maybe Theymos should be made aware of that.  Merit sources might be advised not to even joke about selling merit, seeing as how corrupt most people seem to be on bitcointalk.

It is indeed irrational, which is all the more reason for you to have a thicker skin about it.  If he's screaming idiotic nonsense, no one is going to take him seriously and thus your reputation isn't really damaged.  Just let it roll off you, and as hard as it might be, put him on ignore and let him stay there.