This is exactly the type of feedback I am looking for! Thank you diego! Of course this project is far from perfect hand has its hurdles. I'll try to give my view on the points you raised.

As I see anyone can load up a bounty. What prevents me to be both the owner of the repository and the solver (with a duplicate account) and merge a fake pull request to take away all the bounty rewards?

The fact that anyone can deposit funds to any bounty, not just the project owner, was more or less an unintended "feature". Either it will be removed or it must be made very clear to people other than the bounty owner that deposits cannot be refunded in case the issue does not get resolved.

It is unlikely that many people will donate their own funds for the solution of an issue, or at least hardly will be the norm. Most probably the project owners are going to be the ones using the bounty system more often. What is the benefit for me as a project owner? Why should I pay the blocktrades fees and eventual merge-rewards fees when I could just have a direct deal with the developers?

Because for a direct deal with developers you need to know the developers and communicate with them. In that case you maybe don't need any service like Merge Rewards at all. I think bounties are most of all to generate attention and attract new developers.

Converting all the funds to SBD comes with the serious issue of losing the original value of the funds against USD. SBD is really quite far from being a low volatility coin, which means 1 BTC converted to SBD hardly will keep the same value against USD. Why should I take this risk when creating a bounty? The same question would apply for the solver of the bounty.

The solver of the bounty does not need to care about anything I think because it's a profit in any case.
The owner on the other hand just needs to know that sending bitcoin to an issue does not mean depositing bitcoin but paying with bitcoin for a certain dollar value at that moment.

For users I think it's most intuitive to see dollar values. Using SBD was the easiest way to get at least close to that.

What happens if the issue is never solved or closed without a solution? When the funds are returned and how?

A bounty can be closed at any time, as long as it has not been released to a someone, and the funds are going to the creator of the issue. Again, payments from other users are not considered. The whole bounty will go to the creator.

What happens if the issue is solved but the rewards never claimed by the solver?

Then the creator of the bounty can cancel the bounty like described above. The process however should be pretty straight forward. Either a bounty is released manually or automatically when the user who solved the issue claims rewards for the related pull request. Of course this procedure needs to be well communicated. It's up to the user when to withdraw their rewards.

What happens if one or more donors want to get their funds back before the issue is closed?

As described before, this is simply not possible.

How do you manage eventual disputes?

Can you give an example? The service is completely automated and follows programmed rules. Communicating these rules is of course important but there should not be so much room for dispute.

All the funds are held by merge-rewards, this is another serious issue. Most of your competitors out there are holding the funds in smart contracts. In this case you will be responsible for the funds, both under a legal and taxation perspective as well as for the biggest issue of keeping the funds secure. You may face hard times with the regulations and you should consider a different approach here very very soon IMHO.

I would prefer stuff like smart contracts as well, definitely. I know that this whole topic is potentially a big issue and something I have on my list. My technical capacity is just not enough to cover that aspect currently. Any help with that would be HIGHLY appreciated!