After reading this thread I am quite amazed because I would have said without any hint of a doubt that merit selling is some kind of merit abuse and, therefore, clear reason to be banned. But, surprise! there is no rule that prohibits it and, applying the analogy, it is legit (but discouraged) 
Theymos probably don’t want to become harsh on dealing with merit abuse since it’s easy to spot them using merit graph and he believes that implication of having a red tag is enough to scare those user that will deal with it instead of making additional work for mods to ban all the suspected merit abusers.
Red tag user is almost equal to no value account because they can’t join the campaign which is the main reason why users want to earn merit on quick way to rank up and join campaign.
As I've said before, I'm not really worried about it. Especially at those high prices (plus the risk of being red-tagged), it's enough of a barrier that it should still serve its intended function of creating a significant cost/barrier for garbage-posters.