You are very generous and I do see your point.  However, I see merits as a valuable and scarce commodity and if all else is equal (which it usually isn't), I'd give my smerits to lower-ranked members over Legendaries.  Hero members still need them, but Legendaries can't rank up any more than they have.  The problem has always been finding those low-ranked members who make decent posts.  Often I find myself doing what you and Vod do, which is giving out merits without regard to rank or need.  It so happens that I find posts made by older members a lot more interesting.

Foxpup, for some reason, has given me quite a bit of merit and though I don't "need" it, it is always nice to have some smerit to give out. 

Anyway, since smerits are very limited--especially if you're in the lower ranks--it's understandabe that you'd want to be selective about who you give it out to.  I think that's perfectly acceptable.