Your ideas look good, but it should be adjusted a little bit.
need first 1 merit from others for Newbie to be Jr., wear the signature and post the image.
need first 1 merit from others for Member to wear the signature.
need first 2 merit from others for FM, Sr. to wear the signature.
need first 3 merit from others for Hero, Legend to wear the signature.
Something like this one, increasing merits required for each rank, higher than required merits at the beginning of merit system.
It means users have to earn at least 1, 2 or 3 merits by themselves from their constructive threads or from merit selling (
) in order to maintain their ranks.
If they are unable to do this, they will be automatically demoted, like Junior Members in September this year.
If the suggestion will be really implemented, we will definitely witness a massive wave of demotion from higher ranked users, from Full Members to Ledgendary.
We might see a shocking events in the forum, one of the biggest shocks since the start of bitcointalk forum, including the implementation of merit system, and this one (if occur).