Okay, let me say not blocked. Yes linking is automatic, but if an instance appears in the linked column, it can’t appear in the blocked column. You want to check that neither instance is blocked, which is the same as saying both instances are linked.
This is going to happen a lot as Lemmy grows. There will be more communities with the same name over different instances. Though the full canonical name is the actual name of the community, not just the prefix name. For example !piracy@lemmy.dbzer0.com and !piracy@lemmy.ml are two different communities with two different names.
There’s no federation wide rules about reusing the prefix name of a community. You can have as many repeats as people create. It’s just the nature of how the decentralized architecture works. In other words you can’t duplicate names on a particular instance, but the entire Fediverse doesn’t care because it differentiates by instance name.
I have a number of duplicates I subscribe to and it’s transparent when I look at the front page of subscribed communities. However I have to look at each duplicate individually when selecting a community to view. An option to look at communities in groups would be helpful. I think that’s a reasonable feature to incorporate. It could be as simple as adding a checkbox to select more than one community to view at a time.
I don’t think it will ever be possible to physically merge communities across multiple instances at a base level. It’s likely something that exceeds scope of design.