I had a folder located at my home directory called Pictures with a folder inside also called Pictures and I moved ~/Pictures/Pictures to the home folder; dolphin asked me if I want to merge them, I clicked yes, the original contents inside ~/Pictures are gone and the files originating from ~/Pictures/Pictures are gone, but the folders remain. Reproducible: Didn't try On Kubuntu 16.04 64-bit and also Ark was extracting files to ~/Pictures.
Can you recreate the issue? Looks like it's been fixed, as I have no problem achieving that in Neon, Plasma 5.12. All the content is there in ~/Pictures after moving. (Also, the option is called "Write into" now)
cannot reproduce on Arch Linux, Dolphin 17.12.3.
I can't reproduce this bug. Writing into folders with a thousand pictures works fine now.