Yep - they pretty much made it useless! (Along with all of the other improvements that are trapped in the horrible city level-up system.)
I am sad that you don't like the citylevelup system mqpiffle. A little history, Merchant was too powerful as a midgame tech unlock for level 2. So they decreased it from +3 Gildar to +2. Then, to further reduce the spam incentive, it was moved to level 3, then 4. But at that point Merchant was irrelevant, only adding a small amount of gildar to the more significant population income. Now it is a citylevelup that is ineffectual at +2 Gildar.
The problem is not the citylevelup system, but that those buildings add nothing in the way of a bonus to your city. You are right to dislike them, at closer look you will see that many of them are less useful than normal buildings. They need to have better direction though. No reason to remove a potentially exceptional city bonus improvements, just needs some flavor. I have made my own increases to each building, making them specialize a city as described in my improvement review.
Perhaps I could get you to test this out to change your mind?