Town also has a very powerful coplike on their team, which I'd think means the chance of scum winning by the normal means is considerably reduced. With 7 town members to pick between, it probably won't be that easy to pick out a clever Merlin, either.
But if you think it is too imbalanced in favour of town, I could always add another PR on the town side (keeping with the Avalon theme, probably Percival, who knows who Merlin is).
PPE: This isn't really anything like Assassin in the palace. That game has an extremely high town winrate by the lynch randoms strategy. Doing that here wouldn't work because you're actually playing a proper Mafia game at the same time, and you have a Merlin who knows who needs to be lynched. Er, it probably wouldn't work at least.
And yeah all town members flip as 'town'. Merlin flipping as Merlin would break the game. I forgot to add that (I made the rules like 9 months ago, its easy to forget little details)