For the record, I rarely farm. I have about 50 50s, all leveled through content most with at least some T4s and IO'd out.
So looking at the farming forum, it seems like the inf per minute is around 3 million for someone triple boxing.. For a 5 person team the most recent figure I saw was over 6 million per minute. Sticking with the triple boxer, at the current rate of exchange, roughly 60k inf per converter, that's the equivalent of getting at least 16 merits per minute of invested time. so a 10 minute arc like Matthew Hashaby would have to reward 160 merits to compete. Of course then this floods the market with converters (or Purples, etc.) and devalues them, so you need to reward people even more. And of course Matthew Hashaby is a fast arc with little travel time. There are lots of arcs that take an hour that reward like 10 - 20 merits. Also factor in AFK farming and I think it's reasonable to conclude that there's no way to make actually just playing the content as rewarding as farming as far as inf goes.
Even if you cut out triple boxing for some reason, it's still over 50 merits for the arc and the flooding of the market with rewards, whether its enhancers or purple sets, is still an issue.
As for XP, I have a really bad fire farmer, and I can Level a character on another account up to 50 in a few hours., better farmers can do it much faster. I don't think the goal is to make the 1- 50 leveling experience take less than 4 hours, and even if it is, players would be spending about 20 minutes in each zone, even if you limited yourself to just a handful of zones; say Atlas, the Hollows, Kings, Croatoa, Steel, Skyway, Faultline IP, Talos FF, Bricks and PI. So players would still be done with the leveling experience without doing more than 1 short arc in each of those zones, and never visiting Perez, Eden, Boomtown, TV, Crey's, the RWZ any of the Shadow Shard, etc.
IMO the only way to get people to actually play the story content, if that's the goal, would be to create something that can ONLY be gotten from completing story arcs. Maybe a new type of enhancement that's clearly superior to Purples, etc., that can't be traded, sold or gotten in any other way. Maybe more accolades that are tied mission badges or even to souvenirs, maybe a level 50 completing a story through Oro could get incarnate salvage. IDK what the answer is, but I definitely don't think it's realistic to make story arcs give the kinds of rewards farming does.