Merlin's "guilt" over the deaths that have occurred
I think you and I have a difference of opinion about what constitutes moral/acceptable behavior in this instance. Nor is that the only reason why nuking Zion is not an option for Merlin. Taking the many reasons for that in no particular order:
Merlin feels personally responsible for the deaths which have already occurred. He is, however, among other things, a product of a Terran Federation Navy which was sworn to the preservation of human life in a war it knew it was losing — a conflict which could have only one outcome. Nimue spent her entire life in that environment, with that overriding imperative. When Merlin says that Nimue was sworn to protect human life, he is telling nothing but the truth, and the number of people he's already personally killed in relatively small groups already weighs heavily enough upon him. By the same token, he knows — when he's willing to look at it logically and listen to the testimony of the native Safeholdians on "his" side — that the war which is currently ongoing between the Church leadership and those who believe in freedom of conscience (or at least adherence to the spirit of the Writ as they understand it) was inevitable. In point of fact, aside from the delay he caused an Archbishop Erayk's pastoral visit (which, arguably, delayed him long enough for the ground fire in Charis to get beyond the point where he could have hoped to re-exert any sort of control), Merlin had very little to do with Clyntahn's decision to launch the attack on Charis. Arabic numerals? That (along with the abacus) was really the only major innovation to have come out of Charis — and reached the Group of Four's attention — which was Merlin's handiwork. Clyntahn had been planning his "final solution" to the Charisian problem for quite some time; he scarcely needed anything Merlin might have done as an excuse.
Despite that, Merlin does feel responsible, even though Cayleb, Sharleyan, Maikel, Nahrmahn (when alive), and many others have told him that it would have happened anyway and that his "guilt" consists primarily of giving Charis an opportunity to survive, thereby lengthening the war and extending the massacre to somewhere else instead of basically allowing Clyntahn to simply depopulate Charis and be done with it… until the next secular realm pissed him off.
At the same time, as other readers have pointed out, his primary mission is not the survival of Charis or even of his friends and loved ones. His primary mission is to make sure that the Church is permanently and totally discredited as a "thought control" mechanism, that the orbital bombardment platform doesn't blast Safehold back into the equivalent of the dark ages, and that humanity is ready the next time it runs into the Gbaba. From that perspective, and speaking totally cold-bloodedly, the more thoroughly the Group of Four discredits itself with the human race — the more and greater the excesses and atrocities Clyntahn is allowed to perpetuate without being stopped by the rest of the Church hierarchy — the more the Church's legitimacy is undermined and, eventually, destroyed. I'm not saying that Merlin is deliberately attempting to provoke additional atrocities, because he isn't — his mind doesn't work that way — but he is aware of that side of the equation… and so are Cayleb and Maikel Staynair, quite possibly to an even greater extent than Merlin is. Moreover, Merlin most definitely is aware that he has to get the innovation/invention genie as thoroughly as possible out of the bottle before the Church is defeated. Nimue was a sufficiently astute student of history, and has had long enough to think about this, to realize that even when the Church is defeated militarily, it is extraordinarily unlikely that the Reformists and the Church of Charis are going to succeed in destroying the existing Church (unless, of course, it has succeeded in wreaking sufficient havoc and atrocities to generate the sort of universal revulsion Nazism and Hitler’s "Final Solution" generated after World War II and we have the equivalent of the Nuremberg trials and denazification on a planetary scale). The Church of God Awaiting is almost certainly going to survive the current jihad, one way or the other, and that means that the habit of thinking outside the Writ's limitations and the Proscriptions of Jwo-jeng has to become so widespread, so pervasive, that even a Church which has a successful Counter Reformation won't be able to fence it around with new restrictions and turn it back off at the tap. From that perspective — again, speaking cold bloodedly — he doesn't want to end the jihad tomorrow. Please note that that doesn't mean he'll deliberately delay a Charisian victory or sabotage Siddarmarkian armies in the field, because he won't; he'll fight like hell for Charisian victory. But it is a fundamental, underlying strand of his strategy and his mission.
Leaving all of that aside, however, there is the question of his personal morality, how it plays into that oath Nimue swore (and his own feelings of guilt over the fact that, despite all it can do, the TFN was unable to fulfill that oath), and exactly where direct (as opposed to indirect) responsibility for the atrocities actually lies.
Merlin is not prepared, is not willing, is morally unalterably opposed, to murdering a couple of million people who would never have any opportunity of defending themselves simply because they have been controlled by a monstrous lie and exploited by a corrupt institution headed by four greedy men, one of whom is a certifiable megalomaniac. He simply won't do it. He can't do it, and he is not prepared to salve his conscience with the argument of "expediency" or that "the ends justify the means." It would be a monstrous act, and while he might be willing to accept the blood guilt for it even if it condemns the soul he firmly believes in to hell if he felt it was the only solution to the problem of the Church of God Awaiting and the bombardment platform, that doesn't change the fact that he would regard it as utterly morally reprehensible and a sin against God Himself. In fact, Merlin would argue that if he does indeed still have a soul at this point, and he carried out such an act, he would deserve to spend the rest of eternity in hell. Nimue's oath to the Terran Federation Navy, her sense of having failed in that obligation, Merlin's conviction that it is his duty to protect rather than to destroy — all of those things factor into the psychology of his decision, but only to reinforce the fundamental bedrock of his conviction that it would be an act of evil and that if he could convince himself otherwise there would be no difference between him and Zhaspahr Clyntahn aside from their objectives.
It can be argued — indeed, I have seen it argued in posts on this site — that by not wiping out a couple of million innocent human beings in an eye blink, he is actually facilitating the evils which are being done. That it is somehow his fault that Zhaspahr Clyntahn and the Inquisition are able to commit the atrocities they are committing because he has the power to stop them and he refuses to use it. I'm sorry, but this is the same sort of logic — in reverse — which makes a terrorist's victims responsible for what happens to them. Merlin believes in freedom of will. So does the Church of Charis and the Reformists in general. So, in many ways, does the Church of God Awaiting, which is one reason for the Punishment of Schueler — men have the freedom to choose to do evil, which means that some of them inevitably will, and when they do, it is Mother Church's responsibility to deal with that evil. Merlin is not responsible for what others choose to do, any more than the Western Allies were "responsible" for Hitler’s and Himmler’s decision to implement a full bore extermination policy towards the Jews when they began to realize they were likely to lose (or at least not win) the war.
One of the striking aspects, for me, of the debate over moral responsibility and choices in warfare comes out of World War II and is too often lost in the shadows of the Holocaust. Who actually bears the moral responsibility for the millions of dead civilians killed in places like Hamburg, Dresden, Nagasaki, and Hiroshima? Was it the Germans, who first began the practice of bombing civilian centers of population from the air and therefore, in a sense, reaped what they had sowed? Was it the Japanese, who after all were responsible for the Rape of Nanking, the attack on Pearl Harbor, and the Batan Death March, and whose distortion of the code of bushido led to the horrendous casualties suffered by both sides in places like Tarawa and Okinawa and to the introduction of kamikaze attacks which convinced the US that an actual invasion would have resulted in over a million military [casualties] alone? Or was it the political and military leaders who dispatched the bombers that actually killed the civilians in question? Can men like Winston Churchill, Frankloin Roosevelt, Harry Truman, “Bomber” Harris, Carl Spaatz, and Curtis LeMay be let off the hook because the other side "made them do it," or should they be held accountable for their own actions and decisions? In many cases, there most definitely were other choices, other options, and people at the time who pointed those options out. Those other options were ignored, however, and surely that means that the military and political leaders who chose to ignore them must bear responsibility for that decision, if no other.
My point here is that Merlin is not responsible, whatever he may think, for a single atrocity the Church has committed. It is because Merlin is not a psychopath that he thinks he is responsible, but the truth of the matter is that the people ordering and carrying out the atrocities are responsible, and no one else. Would Merlin, therefore, be justified in personally killing a couple of million human beings to prevent what the Inquisition and the Church of God Awaiting under Zhaspahr Clyntahn's leadership is currently doing? Does he have the moral right to murder other innocent civilians in order to prevent someone else from killing innocent civilians?
Merlin doesn't believe he does, and the true difference between him and Zhaspahr Clyntahn isn't the fact that Clyntahn is a self-serving, megalomaniac, sabyrite who believes that as God's anointed champion he can do whatever he wants, but rather that Merlin will not use the argument that "the ends justify the means" to excuse himself for doing something he knows — knows, deep down at the core of what makes him who he is — is not simply wrong but an abomination in the eyes of God.
Having said all of the above, I should also point out that the numbers being thrown around at this point for the deaths and suffering being inflicted by Clyntahn and the Inquisition certainly aren't based on anything I've given you. Starvation, privation, atrocities — all of that is, indeed, happening on a vast scale, but 130,000,000? The combined population of Safehold is a whisker over 1,000,000,000, so this number is a full 13% of the total population of the planet! How are that many human beings supposed to be being killed, tortured, and starved simultaneously?
Remember that the western provinces of the Republic of Siddarmark were the most lightly populated ones, and that the entire population of the Republic amounts to only 129,000,000 and change. You can't seriously throw the entire population of Siddarmark into the scales for Merlin to balance against murdering the entire population of Zion any more than you could argue that the entire population of the Soviet Union in 1940 was directly and immediately threatened and subjected to atrocities by the German Army between 1941 and the Battle of Kursk in 1943. I admit that the numbers of Siddarmarkian's who have died, suffered, or been displaced — or who will have been by the time the invasion of Siddarmark is over — greatly outnumber the total population of Zion, but not by anywhere near the scale which is being suggested by using the number 130,000,000.
Even the Nazi extermination machine, with all the advantages of mid-twentieth century technology, was unable to get anywhere near that figure. Estimates for the total number killed in the Holocaust range from 10,000,000 to 26,000,000, and the death toll for the entire war ranges from a low of 40,000,000 to a high of around 78-80,000,000, or about 1.5-3% of the then-current world population. World War I killed between 15,000,000 and 65,000,000 (and the high end number includes the death toll of the Spanish influenza epidemic, not just the direct casualkties inflicted as a result of military operations) or roughly 1-4% of the current world population. To get to higher percentages of the world population than that, you have to go to wars like the Mongol invasions, or the domestic warfare of China prior to the 19th century, where I would submit that the very best records available are likely to be… unreliable, at best. Lord knows there's enough dispute today about numbers in current, ongoing humanitarian tragedies to make me dubious about records that are four and five hundred years old. My point, however, is that Zhaspahr Clyntahn isn't even in shouting range of that kind of number at this point, and all indications are that the curve of Charisian innovation is sufficient that the Church of God Awaiting isn't going to be able to inflict that kind of death toll before its armies are eventually crushed by the Empire of Charis. It's valid to point out that Merlin's "inaction" is leaving Clyntahn alive to add to his box score, but I think we ought to at least restrict ourselves to numbers that bear a passing resemblance to the numbers the Inquisition and the Church of God Awaiting and its forces have already or are actually in a position to inflict at this time.