I will say, I was expecting a bigger reaction out of Merlin for Zen-Aku's transformation, being that he canonically hates Black Magic.
I take that as him talking about 'dark magic' like witchcraft/cultist stuff in the movie. But with Kingdom Hearts being a merge between Disney and Final Fantasy, in this case Black Magic has a different meaning, that it is just a school of magic. So when this version of Merlin says he'd never touch 'Black Magic', he means that school of magic which he finds far too dangerous and destructive since that's the only purpose Black Magic really serves is to destroy.
Morgan herself uses Black Magic. (Elements such as Ice, Fire, and Lightning fall under Black Magic)
But overall in general, I'm just playing him as the kinda guy who isn't going to judge people for what methods they use when it comes to magic, as long as he's not hurting anyone as far as Merlin can tell. And as long as he's not doing necromancy or something right in front of him, or sacrificing people. So even if someone is using darker magic, he puts more weight in their attitude and how much respect they show.
After all, he was still nice to the supposedly 'evil witch' even after she tried to kill him. Well, nicer than she wanted him to be.