What I wish to know: If I allocate some or all of my merits to a person I feel that they deserve it and that they should rank up, is it really fine if I do it like that way?
IMO If your judgment is based on their post quality, then you can do it. Like it or not, there will always be someone who questions your decisions, but as long as you give it to decent post (not one line garbage, hard to understand post, plagiarism, etc) then I'd say you're safe. Don't forget to see their post history before you decide to give them a huge amount of merits, because some spammer might change their posting style in order to get merits but after that they'll turn back and start spamming again.
I'd argue that most of the time, we can generally agree whether people are abusing merit or not. So you don't have to be afraid. Best of luck.