Would there be any "protected benefit" issues in a situation where a "non-ERISA" §403(B)(7) custodial arangement is merged into an "ERISA" §403(B)(7) arrangement?

Hmm, I'd say the answer would be a firm "maybe." Going from a non-ERISA plan (either non-ERISA because the employer is a church or governmental entity, or non-ERISA because it is salary-reduction only and meets the other Labor Department tests for not being subject to ERISA) is one of the least explored areas in this whole area of law. I have long wished for guidance on whether the new ERISA rights apply to all money for all participants, or only to persons who have an hour of service after the transformation, or only to money contributed after the transformation. And as far as I've been able to make out, there simply has not been any guidance on this issue.