Oh it definitely works. I successfully merged two BSAs and then merged their respective ESPs together as well and everything works great.
heres what I have merged so far
Inside of ALL.ESP is - Noencumberance, Allmapmarkers, Nelsonmajikshop, console command, bjornheim, palace of von shuuar, bandit castle, septim mansion
Inside of ADVANCE.ESP is - CrunchOgre, Advanced, Grogesh, Stubby Minotaur, Elven Mage
Inside UNICORN.ESP is - Unicorn, Longerdays, MaxAttributes
Inside Of A.ESP & A.BSA - Noscasto Isles, Auriel's Retreat, Bartholm, Castle Dunkelore
the ESP and BSA merges are the most involving but those are the ones that are most worth it if you can get the mods to play nice with eachother... some of them conflict and you'll know if you weren't able to merge the ESPs together.