Interesting. Never considered that. Thanks. With that tactic you can essentially make a "5" star +5 with only 4star units. That was always the drawback, not having the 5 star weapon.
If you merge a 5* hero into the 4* one. He gets all skills the 5* version has then. Skills, which are learnable for 5*s can be learned on that 4* hero, too.
Eliwood is much better with legendary weapon. The Silver Sword doesn't cut it with him unfortunately. He's a good cost efficient horse unit if you're looking for one.