It's been a bit since I've done those merges. The Script.tcScript worked pretty well, IIRC... MDS didn't play quite so nicely with some of the merges. I would suggest do not, EVER, depend upon auto-merge, no matter what tool you use.
Script files themselves play nicely... anything that's the XML file structure of TC project files, just spend good time in examination before merge so you don't inadvertantly mess things up... It does get tricky.
One thing that we did do is make updates to MDS, Script.tcSCript files and other project files "gated" through an integration person. Rather than having all sorts of folks updating those files all over the place, it just made things so much easier to just handle it centrally.
Robert Martin [Hall of Fame] Please consider giving a Kudo if I write good stuff ----
Why automate? I do automated testing because there's only so much a human being can do and remain healthy. Sleep is a requirement. So, while people sleep, automation that I create does what I've described above in order to make sure that nothing gets past the final defense of the testing group. I love good food, good books, good friends, and good fun.