Heya all! 
I posted a solution to the diff problem in the ni.com discussion forum. you can find it here: 
http://forums.ni.com/t5/LabVIEW/LabVIEW-with-Git/td-p/1047455/page/3 
Merging seems to work fine with me, just by following the google doc that Ton Plomp suggested. 
Hope you find it useful