@Saint68 and @Jlcd2000 - I would strongly encourage you to research the specific schools you are interested in applying ED to see what their policies are on merit and ED. I have given examples of schools that have grid awards for merit regardless of ED or RD, @momofzag has a great example of full tuition merit for an ED applicant. One of our major deciding factors in applying ED at American was how merit aid would be affected. For American they place a high value on ED students - they have an 85% ED rate and RD is 29%. They said that they find their ED students to be their most involved students and leaders on their campus. This is why they have the commitment to give ED students the same merit consideration as RD students. As a 1/3 of their entering class comes from ED, I would imagine that an inequality on how merit was awarded would be something that would be known. Students talk about these things and actually I have an anecdote on one RD student believing he got less merit than his equivalent ED peers. At AU they offer both Merit and Grant awards. My son is in line for merit, but not grant. “Merit” should be need blind by definition. Many private schools use the word “grant” to indicate that it is need aware. So please do not take a generalization, investigate how they award merit and grant as schools will vary on this greatly.
In general from a college’s point of view “Why do I need the bait when I already have the fish?”
Generalities are just that general and not applicable to every school. It would be a shame if a student didn’t go ED because of a generality. For some students ED greatly increases their chance of admittance and should be looked at on a case by case basis.
Just an anecdote of 1, but my full pay, ED kid got substantial merit aid. Before deciding to apply ED, we had gotten indications from admissions officer of the likely range of merit he would receive, so we knew he was eligible for merit and, as it was a match/safety school, that he would be admitted. Huge relief to open up the envelop and see the number in print.
“The question is whether applying ED could hurt a merit aid award since the college knows that the student/family are bound to attend if accepted.”
To clarify, this beginning assumption is incorrect; the college knows the ED student is not bound to attend if accepted. The family decides if the aid offered is sufficient to support attendance. An edge case would be where the school is offering a 100% free ride, including transportation to the school; in that case it’s hard to claim insufficiency. 
@vonlost, that’s interesting. I always thought as long as the school met the family’s EFC, that was the measuring still for ‘affordable.’
^ Imagine if that were the case, a student was somehow forced to attend, couldn’t pay the bill, and was dismissed. The PR for the school would be awful. That’s why no student is ever forced to attend any school.
Agreed @vonlost ! There could be a case where the school meets your EFC, but aid package include loans that your family is not comfortable taking out.
@vonlost “a 100% free ride, including transportation to the school” was offered and accepted by my spouse’s nephew to an ivy this year. it was happily accepted.