I think everybody knows by now that deleting characters is a big no-no in Sims 2 .

But there's also no chemistry set in Sims 2, so when a question like this appears I assume we are talking about an idelaized version of Sims 2 where all the features we want are present and corruption is not an issue.
Plus I can see all the suggested features working in ways that avoids deleting characters.

Sims turning into an object: Who says they are dead? Just put them into a state similar to Sims who are at work, with some additional tags that prevents them from calling/being invited to other households.
Fusion: Create a genetic offspring of the two original Sims, make them the same age (and if a same-sex fusion, same sex) as the original two and pass down skills and talent badges in a similar way to Plant babies, then kill the two sims in a special way that prevents the "X died" memory and instead produces a "X fused" memory. Then teleport the two gravestones to a hidden lot.
Sure those aren't not perfect solutions, but maybe not any more problematic than vanilla Apartments.

Likewise, I'm pretty sure everybody knows that Chemistry isn't Alchemy, but well...real life geneticists also don't tend to create human-devouring plant-cow hybrids either AND the Sims 1 chemistry set had some very wild options, so I don't see how this would be worse.

Regarding sims turning into objects - don't they already so something like this when they die and turn into urns/gravestones?