My original assumption was correct, the topic was was moved. It would be interesting to see what opinion theymos would hold on the matter. Imagine compulsive liar and chief manipulator "naim027" creating a merit giveaway thread and handing out merits to his farmed accounts, the mere idea of that would be unacceptable.
I cannot be sure but I think when I discovered the thread it was not in Off Topic, it could have been moved there by a moderator. As I stated, I am not sure but maybe someone will correct me.
It was originally in the main bitcoin discussion sub. Personally, I don't think people should be holding competitions to give away merit. As you've mentioned, it is ripe for abuse and could easily be used to launder merit. Farmers will quickly exploit it and if one person does it even more so will try it.