Is it a good thing to have merges that never fail? Often a merge failure indicates a semantic conflict, not just "two changes in the same place". You want to be aware of and forced to manually deal with such cases.

I assume the proposed system addresses it somehow but I don't see it in my quick read of this.

Indeed. And plenty of successful merges end up with code that won't compile.

FWIW I've struggled to get AI tools to handle merge conflicts well (especially rebase) for the same underlying reason.