The Tavern

Merfolk are one of the most pigeonholed races in this game, with quite a few +- 3 aptitudes. While it is interesting to have a specialized race, I think a bit less extreme would make them more interesting.

Polearms: +4 -> +3
While Polearms apt is one of Mf's defining features, +4 is insane. Unless you are playing Tm or full stealth, it completely invalidates the other options.

Long Blades: +1 -> +2
With HE gone, we don't have a LB niche, and this makes it a bit more of a decision between polearms and LB.

Necro, air, earth: -2 -> -1
Summonings: 0 -> -1
Poison Magic: +1 -> 0 or -1
These all feel pretty arbitrary. Flattening them a bit would preserve Mf's strengths and weaknesses but give them a few more options. If Poison were reduced to -1, I'd say bump Conj to -1 just to make being a VM less miserable.

Counterpoint: Polearms are straightforwardly superior to long blades and 3 is still more than 2. Even if merfolk had +3 or 4 in both, you would still go polearms.

I would remind you that minotaurs also have +2 long blades.

As for the other changes, merfolk are primarily distinguished by having better aptitudes than humans (and being able to cheez some entrance vaults). Bringing this human-like species closer to humans is not the way to go in my opinion.

IMO the interesting distinguishing facets of Mf are the high UC, high dodging, low armor, and low conjurations, and these drastic factors would all be preserved.