Well I may have a solution!
Merle and Morganthe might be classmates (She used magic to make herself look younger) but they were rivals at Ravenwood and he ended up being selected to be Headmaster over her so she went and made some huge army of undead things called Shadow Weavers, if you've done the Celesita pre-quest line you've found out that their not the friendliest creatures in the spiral, but anyway she retreated to the farthest corner of the spiral and took over the last 5 or so worlds with her Bug-like baddies.
Friendly has a really great post with Jason Durall on his site www.thefriendlynecromancer.blogspot.com
At the end of the post Friendly mentions worlds that Morganthe has already taken over and that got me thinking. What if Merle had a daughter, and she was in one of those worlds? You'd have to find her, go get Merle and hurry back but *Gasp* She's gone. The whole Morganthe story-line could rotate around Merle's missing daughter. and at the end Merle would help you in defeating Morganthe in some battle of epic proportions.
Remember the 100,000 health Malistare? How Sylvia came into the battle and healed you. I was thinking Merle could do something like that but he'd put up blades and traps
If you have no idea what I'm talking about when I say the 100,000 health Malistare. I'll give you the short version.
For a short time in-game Malistare's health was uped from 10,000 to 100,000. BUT in this battle his wife, Sylvia, would come into the battle and heal your team. Pretty epic huh? I feel sorry for the brand new grandmaster who had to go up against Malistare during this time.
ANYWAY, what do you think the plot line will hold after Celestia? Leave your voice in the comments