As described here,
merge performance is dramatically slowed if any directory in the merge target
has a sufficiently large number of children. At some point the entries file for
such directories reaches a size where the initial walk of the target tree
looking for paths of interest (libsvn_client/merge.c:get_mergeinfo_paths) takes
an inordinate amount of time when checking for switched paths
(libsvn_client/merge.c:get_mergeinfo_walk_cb's call to svn_wc__path_switched()).
I can confirm that this occurs on Windows and have good user-provided evidence
that it occurs on Debian linux.
This problem *should* go away with wcng, since the entries file is going away,
but I'll leave this issue open until I can confirm that it does.