You will not get a truely seamless merge using DVDShrink or DVDFab because you still end up with 2 titles instead of 1 title. There will be a slight pause when switching between titles as navigation will have to go through the VMG domain for redirection to the next title. How noticeable the pause is depends on the speed of your dvd player , and how first part of video ends and second part of video starts. If the first part fades to black and the second part starts from black, then this will be tolerable. You will notice the pause right away if the movie is split in the middle of an action sequence.
You can already do everything in DVDShrink. No need to use several programs in your first post. Since you're combining 2 DVD9 discs into 1 DVD9 disc, this will require compression.
First, select the option "Remove layer break" in Shrink. This will remove the layer break flag in discs 1 and 2. Go to Reauthor mode and add the movie title from disc 1 and 2. Uncheck the unwanted audio and subpicture tracks. Remove unwanted video. Backup with Deep Analysis and AEC.
You can do the merge in DVDFab but, correct me if I'm wrong, I don't think you're able to cut a portion of video in a title for Merge mode.
As for the burning part, you can burn with DVDFab or Imgburn. DVDFab supposedly is able to detect where to insert the layer break when burning to DVD9. If it fails, it's something to be looked at.
I know Imgburn is able to do this very well. It will bring up a window telling you which cell is best for layer break selection. Just read the star rating system and follow directions.
If you really want a seamless merge as combining 2 titles to 1, you can give DVD2ONE or DVDReMake Pro a try. DVD2ONE is probably easier for you as its interface is rather simple. DVDReMake Pro is a more advanced and friendly DVD Editor, which I love as you can do almost anything with it.
EDIT: I notice you have Nero 7, if you have Recode, it may be able to do a seamless merge.