Comment 17 for bug 95854

Ran into this one too, in a different way.
What makes it even worse: if you merge directories, it's MUCH more likely than usual that at least one of them contains symlinks into another. And then moved symlinks overwrite their own destinations. With files you at least retain something useful...
I just tested it meging two ".../test/" - destination contained a real non-empty subdirectory and source contained symlink to it with the same name. Oh, yes, nautilus does ask whether to overwrite. The problem: it asks this -

File conflict
Merge folder "1"?
Another folder of the same name exists in "test"
...

["folder" icon] Original file
Size:(null)
Last modified: 11:22

["folder" icon] Replace with:
Size:(null)
Last modified: 11:33

Which gives an impression that they are of the same type and both are empty - while neither is true. Thus the user trusting the dialog is going to confirm, and have the real directory overwritten with now-broken link.