The Red Tory tradition, which was more of a protectionist and communitarian/paternalistic strain of politics closely associated with the Anglo tradition, has faded away, as those issues have faded away. Red Toryism now really doesn't mean very much other than I guess how the term "wet" was used in connection to some UK Tories in the 1980s.
It's actually more complicated than that, as far as Red Toryism is concerned.
>The original type were the Radical Tories, which formed as a moderate conservatism in reaction to the 1837-8 rebellions throughout both Upper and Lower Canada. They shared similar conservative roots to the High Tories (the Château Clique in Lower Canada and the Family Compact in Upper Canada), but were more open to reform and change within the system. This is the hard of the One-Nation Tory/Tory democracy view of things, which often gets conflated with the phrase "Red Tory".
>Red Tories, by contrast, were more progressive than the Radical Tories, while the Blue Tories found their support with the commercial élites in Montréal's Square Mile and Toronto's Bay Street and were more, to borrow a European phrase, "conservative-liberal". Both wings evolved from Radical Toryism and went their separate directions. A more modern phenomenon is that of the Purple Tories, which could be either Blue Tories who have adopted some Red Tory positions and vice-versa - but which is not at all like Radical Toryism (which is probably similar to calling someone a European-style Christian Democrat with Canadian characteristics). The problem that arises is that since the '90s, Purple Tories have been redefined as "Red Tories", both Radical and genuine Red Tories have gradually been pushed out of the existing Tories, and there you go.
I've had a few detailed posts on this, but the search function is being non-cooperative at the moment (and I'm late for work
and dinner), so I'll just cut to the chase and go with what would happen if the Grits and NDP merged. Now, I'd agree that you'd have splits in the Grits and the NDP in reaction to the merger, but not quite in the way that some would expect. I'd see, for example, the Blue Liberals mopping up whatever remained of the Red and Radical Tory definitions and form their own party (much like how in France
the Centrist Party emerged from François Bayrou's renaming of the UDF party into MoDem, for example). The left-wing splinter of the NDP (the successor to many such currents including the Waffle and the former radical CCF tradition) would have its own issues, but (apart from Québec) I could see it in alliance with Québec solidaire, which would create all sorts of interesting consequences. Both the Blue Liberal/Red Tory party and the QS-like left-wing NDP split would mop up some of the minor third parties, if they so chose (i.e. for the BL/RT party the
Progressive Canadian Party would be an attractive target), but apart from that it would initially not dent Harper's chances until the 2015 election. Then you'd either have a clear choice between two shades of conservative (the Tories and the reincarnated PC Party) and two shades of liberal (the PC Party again or the Liberal Democratic Party).
That would be a fun election to watch. Either way, the Bloc would
still be in serious trouble due to problems of the Bloc's own making, and I don't see the left-wing NDP splinter retaining/gaining enough seats to form a Government, although they'd still have a presence in the House of Commons.