"So it seems FTM is a rocket man in a neanderthal world. So I guess I'll just let it sit on my hard drive until it's time for my next upgrade of hardware. I'm just glad I didn't waste any time importing files before I found this out."
The memory limitation is to do with 32 bit addressing (32 bits about 4 Gbytes)
64 bit OSs can support much more but 32 bit programs such as FTM are limited to 3 Gbytes.
I have 4Gbytes and have never bothered going above that.
I suspect that when merging, which is a complicated process which involves repeatedly checking each record, the memory that is allocated to each record in the SQL database isn't released, but that's just a guess.
The pagefile/swapfile can take the total to 4Gbytes. I presume your system is set up to use a pagefile?