If I may, let me clarify something regarding "Merge titles" feature in Recode 2. So I give this a whirl to see what it does.
A little background, when you say "Title", you are actually referring to the title as displayed in the software and dvd player. Thus, this is also shown in Recode 2 and DVDShrink, and other software. The title is actually defined in the VIDEO_TS.IFO, so let's call this "VMG Title". This is not the same as VTS_x_y.VOB file because it can have multiple titles.
In the compilation window of Recode2, you can only merge titles from the same aspect ratio titles. Your understanding of "Merge Titles" is that you expect 2 titles to become 1 when you merge. ok, I understand that. But, in fact, it is merging in terms of dvd structure. It's just not what you expect to view it in the software/dvd player.
e.g., You have 3 titles in the compilation window, and you don't hit the "Merge Titles" button, and you burn. You will see 3 VTS (VTS_0x_y.VOB, where x=1,2,3) files, and 3 Titles as displayed in the player.
If you hit the "Merge Titles" button, you will only see 1 VTS (VTS_01_y.VOB) file, and 3 Titles as displayed in the player. So the feature is doing what it is supposed to be doing. Then why does it have 3 Titles? It is just the way the feature is implemented, which also is a cause for the short delay when going from one title to another, and you can only experience this in dvd player.
To understand further, you need to dig a little deeper into the DVD structure. IfoEdit is a great tool for this. What "Merge Titles" does is it put each Title in the compilation into a PGC (ProGram Chain), a total of 3, and all within a VTS (Video Title Set). You will see 3 titles defined for each PGC, this is called "VTS Title" (In IfoEdit, it is shown as TTN_x). "VTS Title" is not the same as "Title"/"VMG Title", and is referenced in the VIDEO_TS.IFO like:
Title 1: VTS_01_*, TTN_1
Title 2: VTS_01_*, TTN_2
Title 3: VTS_01_*, TTN_3
This is the main reason why you still see 3 Titles after merging, when you are expecting to see only 1. And also the reason why you are experiencing a little pause when going from one title to another, because it is actually jumping from 1 PGC to another, indicating non-seamless playback. Could be also another reason - you may have a blank cell at the end of the title.
Since your goal is to see 1 Title and experience seamless playback, the merge must be all in one PGC, requiring the same aspect ratio, resolution, audio/subtitle tracks, etc. For this, follow Oilman's steps above, but also add one more last step: "Get VTS sectors"!
This is what you would do. Of course, DvdReMake Pro can do this easily.
This will result in multi-PGC, and can experience pauses. Also, some players may not be able to go to 2nd title after 1st title is finished, like Powerdvd 6, unless you add a post-command also just to make sure.
I don't know about Nero 7, if it has not changed its merging method, then why upgrade?