If you really are frugal about what you pick and choose, you may not need to use FNVMasterUpdate/Merge patch procedures like me.
I've got few peices of XFO, Project Nevada, WMX, Arwen's camera tweaks, New Vegas Bounties 1 and 2, bottle water mod, crafting backpack mod, and lots of over small tweaks here and there.
The important part is Load Order, Conflict Check (basically, making sure that no two mods mess with the same thing. This is where reading the readme is important), Merge ESP and Master Update when necessary.
All I need to really do is the first two steps, really, and I havent had a game go "NO CAN DO" on me yet. I'm already pretty darn far in my current modded game

First off, FNVMasterUpdate breaks New Vegas Bounties' startup, and apparently a lot of mods that uses scripts as well when first loaded. Not sure why but it does. That's why I've haven't master updated my list in quite some time.
Alot of times, mods will do as they say but at the same time, conflict with other mods to make it work. Let's take http://www.newvegasnexus.com/downloads/file.php?id=35011 and http://newvegasnexus.com/downloads/file.php?id=40980 for instance. WARZONES adds off-the-map places, which IWR allows, or prevents access to but doesn't go with WARZONES' area so WARZONES builds it's own area with it's own boundaries that overrides IWR. That's just one example out of the many that occur in a lot of mods. Having conflicts is one thing but sometimes, conflicts are purposeful and required. Relying on BOSS can be a good starting point to sort mods. I guess I should know from experience considering I've done some things on it to make it less conflict-happy. But like you said, you need to read the readme or get a grasp of what it is doing and compare it to what you have. This is especially the case with mods that have scripts, as those will
NEVER EVER be shown as being conflicts in FNVEdit.
What's interesting is that if you're using one of WMX's optional .esps, I.E. Dead Money, Modern Weapons, etc..., you already need a Merged patch as the containers will conflict. A lot of mods change vendors as well and that needs Merge patching as well. And the game will only say a 'NO CAN DO' if either you max out your .esp's, or it just doesn't like something.
I won't talk about my merge patch in particular but it does a lot of things... and when I have to re-do it all over again... there goes another hour of my life making it work haha.
I'm wondering, are there any mods that edit global values for weapon damages and things of that nature, as that should help with the crazy discrepancies between original and mod-added weaponry? Does XFO do that?
XFO, to my knowledge, uses a combination of scripts and values to achieve it's purpose. Most people will tell you though, changing the weapon damage, or auto aim distance, or anything else like that, is something you can probably do on your own with a little help and knowledge. That's why you rarely see one weapon damage mods on the Nexus, aside from maybe the Fat Man.
Also you have to factor in things like WMX and WME that deal with original weaponry yet add something that isn't in the base game onto it. So in the end, I'm really not sure what your question is asking.
@OP Question:
Like the others have said, it's best just to pick and choose rather than using a be-all, end-all mod with many, many, many modules. To be honest, I feel that those types of mods gimp your playing experience. They may include popular mods and all but that's just the thing, it may only consist of popular mods. There are a lot of hidden gems in the Nexus that don't show up until they get their big break. One such example would actually be Vurt's Wasteland Flora Overhaul. It didn't explode on the Nexus like it has lately. Then there's those small weapon mods you really, really like that don't get much attention because they get lost in the amount of weapons there are.