Vertices within a half quant radius will merge. Half quant is a lot for this and I've suggested numerous times for it to be reduced drastically (to something more around 0.1). Anything finer in precision than 1/16 of a quant has little meaning so that should be the minimum. There is no way for it to be changed or any threshold to be set.

Using the scale tool is very inaccurate - avoid using it as you will pretty much never get the original size again. You can get close, but it won't be the original size. When joining models along a seam, never use the scale tool for any reason as it'll cause misalignments.