Wow! I have read every single post in this thread and was not expecting such a high interest in it. Although I may not agree with some of you, I appreciate the time taken to comment and your thoughts. Thanks!

To be fair your merit received is a little inflated due to Searings merit on your post review thread so it would be a little unrealistic to expect 0.5-1 merit everyday.
The initial idea when the Merit System was implemented, was that everyone who was creating decent posts (not spam - the thing merit was intended to fight) would get 1 merit per day, thus aligning with the 1 activity/day you were already receiving and not blocking you to rank up.
Both of you guys don't have a clue on the amount of time needed to review hundreds of applicants and not only review their selected posts but also their post history.

I did all of this for
FREE, to do my part in trying to stop the spam and making people read the forum rules.
Remember that review thread, as well as others I have created overtime, were not post & forget. They were constantly maintained and researched. Take a look at the mining guide or other threads I have created, these are months worth of work and research to provide a good research for people who enjoy mining like I do.
Probably your first solution will be useful in the future, but the second solution is similar to ranking up based on the user activity.
Nope. With the second solution the human factor would be in play and no one who isn't deserving to rank up would. The old system was automated and you would just rank-up automatically.
I think a good start to creating the lists of users that the merit sources would review would be people whom already got the activity but are missing the merits. I think I saw a list about that in some merit analysis thread.