So I have a few observations, as a relatively new-ish perspective (also forgive the wall of text).
1) The invasions: I realize this is obvious but it's something that should be stated nonetheless. Although it'll likely be a relief to TSE's staff, merging and letting SE take some of the burden, the excessive amount of invasions will still be a major problem for both factions. Although the merger will definitely strengthen both factions, that underlying problem will remain and will need to be dealt with by someone at some point. TSE might have some more wiggle room to do it's own narrative but it'll ultimately still have to be a part of those invasions.
2) I can honestly see the concerns regarding becoming a subfaction, especially narratively to a smaller faction. Although the exact narrative can be worked out later, a general plan and outcome should be considered since it'll likely affect people's decision here. I don't entirely blame some people being upset at the progress they made essentially going to another faction, even if that faction is close enough for others to consider doing this, it is still distinct for the time being, and it would be a narrative step back from progress that was already made.
3) I personally can fully understand staff fatigue, it's something I am dealing with myself as an admin on another site. And it's for that reason that I agree with this decision. Remaining in status quo with a fatigued staff is mostly likely going to lead to the faction going minor (as others have said themselves), and I think that would be more upsetting to more people in general.
My Suggestion:
Consider a proper merger as
Lady Marrow
already suggested. I think a single new faction, combining both identities would fulfill the original intent of the merge, and might relieve some of the contention around it. A fresh faction formed from both, instead of one becoming a part of another, would better acknowledge the effort put in by both. It would also generate a slew of new narrative opportunities for TSE to work off and gain muse from that isn't invasions, while also strengthening our overall position both OOC and IC.
A suggestion-within-a-suggestion(?):
This is mainly dependent on the previous part of the suggestion for obvious reasons but is more optional. I think it would definitely help if we considered bringing the Warlords of the Sith into this merge. Tbh I'm not entirely knowledgeable of SE's motivations in OOC or IC terms (by that I mean, what it's goals are narratively, the willingness of their staff to do this, etc), so I have no idea if the original suggestion will be something that's possible, let alone if the Warlords would also join in, but ideally it would further the benefits of my/Marrow's original suggestion to merge all three Sith factions.