I am very involved in the merle chihuahua so perhaps I can shine some light on things.The merle color is 100% accepted by the AKC and Can KC. The standard calls for any color marked or splashed. Splashed pretty accurately describes the merle pattern don't you think? they have however banned the merles with blue eyes to be shown in conformation but they can still be fully registered. There are pictures of merles in chihuahua books dating back to the early 1900's. There is no more of a problem breeding merle chis than any other breed with merles in it. It is always bad practice to breed merle to merle. The breeders I know including myself who choose to breed the merle gene produce very high quality dogs that fall well within the standard and go on to become champions. That is more than can be said for most people breeding their pets together. There is a really great forum that has great info on the merle chi at www.merlechihuahua.proboards24.com if you are interested in learning more and seeing some gorgeous bred to standard dogs as well! Thanks for reading my long post!