Alright let's answer those sequentially.
1. The Faeries are a pretty easy play. Each of them have flying so right off the bat they have evasion as a nuisance. Then there is
Scion of Oona as a Faerie Lord type thing. Basically your Fae are boosted plus they are protected, and because he is not legendary two out protects all Fae from everything but world effects. To get rid of those pesky world effect cards they put in things like
Cryptic Command or
Spellstutter Sprite to make things really hard to get around. And finally to top it all off the other important card in this deck was 30$ and is
Bitter Blossom. Apparently a token each turn for one life isn't that bad of a cost. And considering the fact you might have two Scions out, not only is it protected because it is a Faerie but it produces 3/3 Flyers.
B. Moving along before I talk too long about Faeries, I will regale you with the inner workings of the Tap You Die deck. As you probably noticed the deck is packed full of creatures that have "T: Deal 1 damage to target creature or player." Well that is not
just what most of the cards say. In fact every single one of them have an extra effect and that effect makes this deck extremely effecient. First off let us look at
Gelectrode. He is pretty easy to understand but at first glance it doesn't seem all that great, however, when you start playing a bunch of draw spells + their flashback from
Think Twice you start untapping them a lot. Even if you just have two on the field you are adding Shock to every spell you play. Not to mention that
Cinder Pyromancer also untaps when you play that red spell. Now we move onto the hard hitting stuff, as if that was not enough for you.
The main force of this deck does come from the tap stuff but what really is nice is the
Wee Dragonauts. Every time I make my deck work they get +2/+0 and they have flying. The
Crackleburr is kind of my lord in this deck that effectively taps and untaps my guys for further damage. Not to mention his bounce effect will get rid of targetable threats. This leaves us with my mana cost defying
Niv-Mizzet. He works well whenever I start using a lot of draw spells to untap my guys. In addition his free tap and draw will also draw me into more draw spells or a burn spell thus adding on more points of damage. To finish off this fine creature is the
Curiosity card combo with Niv-MIzzet. A sure fire kill to however much life they have left after suriviving this long.
So that's Tap You Die in a nutshell.
III. Hmmm yes that would be something nice to build a deck around. A creature creating deck would would most likely be the ticket. Let's see if I can pull up a few examples of Merfolk creating Merfolk.
Stonybrook Schoolmaster
Summon the School
I think those two are enough for token creation. The other stuff should be mostly protection and counter Merfolk. You can search for Lorwyn and Shadowmoor block Merfolk and get some good results.