I would favour though displaying the number of earned merits alongside the merit counter (i.e. 120/ 620 -> 120 earned merits out of a total of 620 merits).
Merit: 266/256
I also think this is a neater solution for this issue.
As I said before, I don't think it's fair to think about deranking older members who reached their status before the introduction of the merit system - it puts too much weight on the last 12 months, and it essentially punishes users for being most active during the early years of bitcoin, which is completely backwards when you think about. I'm also not a huge fan of another distinction being made between "good" users and "bad" users. We already have the ranking system and the trust system. As Crypto-DesignService says, it just seems like these badges would introduce another "us v them" or superiority/inferiority dynamic which is counter-productive to a cohesive community and good newbies getting involved in discussions.
I would like to be able to see earned merit vs total merit as in the examples above, or have the airdropped merits slowly start to decay, but I don't think anything more than that is really needed.