Where've you been? I thought you quit aikido and took up ...
(a lame attempt at a joke.)
Based on what you've said, I think that the two dojos should definitely split, otherwise you'll have nothing but problems (for quite a while, anyway) and besides, who wants those kinds of (ego) problems at training?
If, as a merged dojo, you don't mind losing many students, then go ahead and merge.
Personally, I'd vote for the split.