I would suggest NOT to combine it with merchant editor - its always too slow to initialize each time you open it up, so having it run just to work with factions will be a major pain.
ALSO, I am still concerned that faction system in Emu code is bugged. I can't exactly track down the source/causes, but when adding up/editing faction I occasionally end up with issues, where a mob/npc in questions cons PROPERLY in accordance to current faction, yet does not give faction adjacent on kill. I have been at it for a while, and pretty sure its not something I am doing wrong.
My best guess that faction system bug somehow relates to position ordering of faction entries in one the faction table, as well HOW MANY different faction are set to interact with each other. There is either, some sort of max limit in the source code I am not aware of, it simply stops working after certain number of interconnected factions have been created.
To give you an example: I have a certain Guard faction. This faction is set to agro on number of other factions. So say I add about 5 factions for the guards to agro on - all works well. Then I add a 6th faction - it works, but then 1st faction in the list stops working. Or, some other faction elsewhere stops giving faction hits, etc etc etc...
I know, this is not a bug report thread, but I figured if tool is to created, you should be aware of this.
PS. my original faction bug report here:
http://www.eqemulator.org/forums/showthread.php?t=26360
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