Fix bug in merge return (#2734)

* Fix bug in merge return

The merge return pass seems to assume that the only new edges in the cfg
are from return block to merge blocks.  However, it is possible that a
merge block branches to a merge block when it did not before.

This change add a new variable to track all of the new edges.  It also
renames some other variables and cleans us the code to make it a bit
easier to read.

Fixes #2702.