There will be no 'merger' with Virgin. All Virgin is interested in from BMI is your slots at Heathrow; Virgin is not even remotely interested in taking on a full-service shorthaul airline. Any talk of it being 'a good fit' is wishful thinking; as BA's experience has consistently shown, it's difficult to make money out of shorthaul but longhaul is a great deal easier (though not without its moments!). Virgin gets its connecting passengers quite successfully already, without owning the airlines they connect on.
The suggestions of the Virgin/BMI get-together being a merger of equals were smoke-and-mirrors from the BMI side. In reality, it would have been a takeover by Virgin with the sole aim of realising slots for longhaul expansion. The rest of the airline (baby excepted) would probably have been sacrificed at the altar of full-service shorthaul and left to die an agonisingly slow death.
All your problems notwithstanding, you're better off as you are. At least your future is in your own hands. I hope you manage to make it work.