Merging the tree with that "plane" has the problem that the plane will be come transparent too (because the leafs already are). At least that's what would happen in my RPG thing. That already happens to the trunk, but that's not much of an issue. When merging it with the plane, you'll run into order issues between the trunk and the plane. Plus you'll have the same zbuffer issues and it wouldn't work on steep terrain.
About merging thousands of objects into a single one: It always a good idea to reduce the number of draw calls by merging objects. On the other hand, only a few trees are visible at a time so rendering them all as one large objects can hurt performance in this case. Plus it's a memory issue. I can reuse the mesh and the compiled data for each tree, so it's memory footprint to quite small. Merging them all into one objects will make the memory requirements explode, because it would result in a ~200,000 polygon object. So...if you can merge objects that are close together and you have the memory, do it. If not, maybe you shouldn't do it and use cloned instances instead.