Merle is a coat pattern...if you type in merle chihuahua to google and view images, it will show you them. Many of them are carelessly bred and can have health problems. Others are fine. I guess there are exceptions to every rule.
Blue is a coat color, can vary from almost silver to a dark steel gray. Some are very pretty, others not so much lol. The dog won't have black pigment on it's nose or anywhere else, instead some shade of blue.