There are 2 main merging options - Voxels and Surface. I'll touch the surface mode first. In surface mode you get EXACTLY the same mesh as you import (the same topology, the same amount of polygons, everything the same (even artifacts)), so when you scale the mesh that is going to be merged in Surface mode, you just scale it as in usual 3D app. That's it!
Voxel mode, though, looks like this: when you have you model in Merge mode you see it with original poly-structure. Think of it as a container that will be filled with something (voxels) later! So, the lover the polycount the "less" of voxels will be in that container, so the small details will look like crap. The bigger the polycount, better the details because more voxels will "get into" this container. I hope I was clear
So when you merge, you must be sure to prepare "the container" before you click Apply.
If you need clarification, feel free to ask..