AndroidManifest.xml merging is supported in version 20 of the ADT tools:
“Automatic merging of library project manifest files into the including project’s manifest. Enable with the manifestmerger.enabled property.”
You will need version 20.0.3 or newer to get it to work within Eclipse.
Release notes for ADT 21 preview has this comment:
“Fixed manifest merger to properly adapt library classes in the merged manifest.”
Not sure what this means but may be worth checking out if you are having merge issues.