I'm not an expert on FfH lore, but in most universes the different elements are quite incompatible... there's no way you're going to merge a water elemental with a fire elemental, etc.
On the other hand, merging elementals of the *same* element to make bigger ones makes a lot of sense, since they're supposed to be just about unlimited in size on their original elemental planes.
What about this: when you merge elementals, their affinities add up, so that the final elemental has the same original strength as before but an affinity equal to the number of elementals that went into building it.
I'd also favor making every additional mana of the same type add one turn to the summon duration, so you have more time to build up powerful elementals, but you'd probably need to make the originals weaker in that case.
More elemental mana of the same type means that the doors to this elemental plane are wider open, and rewarding specialization is just what makes different games more different and flavorful, IMHO.
Edit: Sorry if I was a bit obscure here. Affinity to one mana type gives 1 strength per mana of that type that you have. Meaning that 3 fire affinity with 4 fire manas available to you gives 12 strength to the unit. Yes, it can be very powerful if you focus on it
If I remember well, right now the various elemental have high basic strength and 1 mana affinity with their element. You probably want to lower theit basic strength by 1 if you implement merged elementals with higher affinity.