Yeah, you can trade guys on the DL. Think he can pass an Orioles physical?
The only thing that doesn't make sense about Merrifield is he doesn't really play 3B. Otherwise, you'd be getting a very attractive long-term asset who is better than Moustakas. If he can do it, he could just play 3B (with Crawford) against lefthanders and RFmostly against lefthanders. Franco gets traded. Altherr to the bench.
I do wonder if the Phillies could just get Moustakas for Franco almost straight-up. They'd be taking on the rest of a $9.5 million bill (including this year's incentives and next year's option buyout) and giving KC a cheap controllable player. Throw in a marginal prospect; maybe two if KC can also send you back a bullpen piece.