Mirror Entity is much much better. Think about it this way, the only situation where either of them are going to be helpful is the late game. In the late game you have to find ways to tap your permanents (relatively easy) for Thrasher, while Mirror Entity just requires you to tapped your already played lands. Late game we have plenty of dead draws, so pumping all our mana into ME isn't usually a bad thing. So 1 vs. 1 they are about the same size, except Thrasher gets the Vial tapped bonus and ME gets the "doesn't need already tapped stuff to be good" bonus.
The parity is broken however, when you have more than one creature on the board. While ME negates your Mutavault, if you have even 1 other creature, say a Cursecatcher, for example, you can pump both ME and him up to a 5/5. This is much better than having a 7/7 Thrasher and a 2/2 Mutavault.
If you are cleared to islandwalk then the numbers get even more ridiculous. Not only does a StoP on Wakethrasher or LoA effectively stop your swing, but if they StoP ME, you just pump all your creatures in response. He makes your tiny Iraqi militia into a freaking US Special Forces. This is incredibly helpful, and much harder to chump block.
Also, usually late game the opponent is within 1-7 life. They can't let through a 7/7 Thrasher, but if you have ME and just one other creature out, they effectively have to block both of them, or drop to 0-2 life from just blocking one.
As for your problem of facing a metagame of not Tier 1/ blue decks, I think you need to go a super aggro route. My suggestion that I thought of while half asleep drooling on my humanities notes was:
Lands:20
6 Islands
1 Plains
6 Fetches
4 tundra
3 Mutavault
Spells: 19
4 Aether Vial
4 Force of Will
4 Daze
2 Echoing Truth
2 Vedalken Shackles
3 S to P
Creatures: 21
2 Tidal Warrior
4 Cursecatcher
4 Silvergill
4 LoA
4 Reejery
3 Mirror Entity
SB
3 B2B
3 Stifle
3 Seal of cleansing
3 Relic
3 Propaganda
Why?
No more relying on destroying lands, non-tier 1 decks usually don't care as much about it, but just in case you're packing 3 B2B. You can get around it with 7 basics, so don't worry about it. Vedalken Shackles beat bad decks, simple as that. I played a very similar deck to this before I found out mono blue was better, and Shackles won me every aggro match out there. No one sees it coming... plus it stopped goblins like none other.
Tidal Warrior helps with giving you an unblockable route, and if you're playing against zoo, which most people play if they aren't playing tier 1, then you can keep Nacatyl and the Ape small for a few turns.
No standstill? No. Against the decks you're expecting you should be siding them out anyway. This deck is probably much better adapted to facing the first few rounds of the GPC since it has more control. We give up tempo, but ME gives it back late game by making all of our people giants.
I'm by no means suggesting this is better than regular Merfolk, this is just an attempt to help out Duke

