I've had the same issue with duplicate sources and I've seen several other comments about the same. I have corrected my sources twice, a couple hundred each time. Not fun! I called tech spt when first noticed and was told there is no fix.
I had not had this problem until I added comments to my FTM sources then uploaded to ATM where I discovered they were shown as new sources, effectively a dupe of the original from ancestry. They cannot be changed on ATM. Of course on the next sync, ancestry sent the original source with any new citations back to FTM. Now it is an unending, continuous thing. I don't know if I caused the original dupe issue by adding the comment or if this is another abnormal, routine occurrence.
The merge vs. replace I think pertains to citations and sources, respectively. The citations are merged but the first source is replaced with the second. This is one process that seems to work. :)