Yep, I think more sources are needed.  Again, this is another Theymos problem that likely doesn't depend on what the community thinks about it, kind of like the perceived need for more moderators.

Right now it seems like decent posters are having to wait a hell of a long time to rank up, and I think it ought to go a little quicker for them and that having more merit sources would help that.  I forget how many members bitcointalk has, but I think it's over a million or so.  If we don't even have 100 merit sources, there are definitely not going to be enough to give sufficient merit to those who deserve it.

If I'm not mistaken, hilariousandco stated that Theymos hasn't been looking at new merit source applications.  I occasionally see some application threads getting bumped from months ago, so I have a feeling that it's not Theymos's priority or that he doesn't think more are needed.  In any case, I don't recall him voicing an opinion on the matter lately and it'd be nice if he did.

If you mean you should lower your standards, I would advise against that.  This problem is not all on your shoulders, either, and you're a very conscientious merit source who probably needs to give himself a break.  The fact is that it isn't easy to find posts worth meriting.  IMO you shouldn't feel pressured to get rid of your sMerits just to get rid of them.  That goes against the spirit of the whole system.  I know you spend a lot of time on the forum, as do I.  When good posts pop up, you'll see them.