well, it's all about angles.
what ghost said about the high guy winning 90% of the time isnt completely true. you see, if you dive for the merge, you are losing altitude, but gaining lots of energy. now, if you are below your opponent, you have a smaller angle to turn until you get him in your sights, while the higher guy has a longer distance to travel. this is assuming you both immelman for the first merge, which is generally the best way to do it.
basically, whenever you duel like that, in a proper duel with a good pilot, you ALWAYS dive before the merge. if you let the other guy get below you and get some speed over you, you've totally screwed up the merge, and with a good stick on your 6, you're dead
so, dive for the merge if you're going head to head, and if the other guy gets significantly below you, eg, more than 250ft below you, you messed up the merge, and the best thing to do is extend and try to do it again, but usually they'll be close enough to you to prevent you from having another chance at a fair merge.
i'll try to explain it a little better:
now, you both are co-e, and one of you dives. he may lose alt, but he gains speed, and so, for all intensive purposes, he still has the same amount of e as you. now air resistance will increase with speed, but its effect isnt really a problem.
so basically, if he is below you, on the merge, he only needs to turn maybe, 100 degrees to get you in his sights, while the guy on top, has to turn maybe 180/190 degrees to get to the same point. now obviously, that is a big difference. now, what you cant do it try to climb, because you may have more alt, but he has more speed. assuming you are both still co-e, you will both be able to climb to roughly the same point before stalling, so if you try to climb, he WILL catch you.
if you mess up the merge, 90% of the time, the fight is already decided. if you really do mess it up, extend, and try to get the distance to merge again, but like i said, a good pilot wont let you do that
if you'd like i can do a little animation of it, so you can see better:aok
edit:
i think ghost isnt quite understanding what you're talking about. ghost, i think revor is talking about altitude on the merge, not the difference between immel and spit-s on the merge.
but anyhow, to add to ghosts point, if you go up, with an immelman, you can use gravity to tighten your turn, and also to help slow you down, giving you a better turn radius. if you go down, gravity tries to drag you down, hindering your turn, and making you faster, which means you lose alt too fast, and your turn radius grows much larger. almost all of the time, an immelman is the move you should be using to engage:aok