You actually have a point. Both merge mining and increasing capacity
actually kinda have their merits for keeping Bitcoin mining profitable long-term. Merge mining is actually a smart move now, But it doesn't really fix Bitcoin's own fee market down the line.
Increasing Bitcoin's capacity by allowing more transactions per block is the direct route to higher fees for miners in the future but you can't actually ignore the downsides too.

Actually, more transactions mean more fees collected which becomes kinda a compensation as new Bitcoin rewards shrink. I think the trick here is doing it without making Bitcoin too hard for regular people to run a node which keeps it decentralized.