I had the VSM SE and used all Cardas cables along with an Audio Research LS25 preamp and various amps, including the ARC VT100, the VT100MKII, a Rowland Model 2 and Rowland Model 10. When I switched to the Dunlavy SC-IV/A it was a HUGE improvement. Bobby told me my amp and preamp were not good matches for the Merlin. Anyway, the room wasn't the problem -- and it was not heavily damped.
So, Marty, please tell us about your associated equipment. Also, are you a fan of pro audio gear? I get the impression that you are, and that's an entirely different world compared to the refinement that I seek in a strictly two-channel system.
From what you write, it's doubtful that you've heard a phase- and time-coherent speaker -- like the Dunlavy, Vandersteen, Thiel or Von Schweikert. These speakers truly disappear. When I had the Merlins, a non-audio friend (but a music lover) said he could hear the tweeter and midrange/woofer drivers distinctly (separately). That's not a good thing.
I have nothing but praise for Bobby's commitment to excellence and his customer service. I just think he's pushed a small two-way design to its limit -- plus you can do a lot better for less money. I'd look to Totem for openers.