Wouldn't that make a great episode. Daryl and Merle facing off. Daryl being on the "good" side and Merle being on the "dark" side. Would Daryl stay with Rick's group or would he go back with his brother? AND, would he try to reason with his brother not to kill the ones who left him up there? If Merle came back as a zombie, Daryl would have no problem shooting him. He's already shown the group he can make the "tough" kills.
Besides, I can totally see Merle leading a group like that. He's an angry vengeful man that would do anything or use anybody to stay alive. I think that guy will do whatever it takes to stay alive until he can get revenge on those who left him up there to die... especially T-Dog!
I mean, c'mon, the guy cut off his own hand with a hacksaw!
In the last minute of that episode, the writers only showed a cut off hand on the roof, so you know he got away. You know they will bring him back, the story line is too juicy not to bring him back!
Too many questions, too many possibilities not to bring him back.