Yup, that's exactly how it works.
That is not good. An image should not have "opposite" tags. And images having so many tags worsens the quality of searches.
Couldn't the tags of the first image be kept?
Who is to guarantee that the image that is being kept is the one with the more appropriate tags?
There is no guarantee, but if the other image is going to be deleted anyway, I see no need to keep the tags. You could also use a script to keep the tags that are shared between the two, but that seems like a more complicated solution to me.
The GWM tag system is not the most accurate in the world, but if you start filling this site with images with 10 or more tags it's going to work worse.
Yes I agree, the system is currently flawed and unfortunately there's no way for us to patrol every image on the site and decide whether each tag is properly applied or not, and even if we could there would still be unhappy users because of the subjective nature of some of these tags. At this point you may as well join the discussion in this thread, where Chainer is designing a new tags system:
I have noticed that when merging duplicate images many images exceed 5 tags. I have even seen some that have "opposite" tags like bodybuilder and figure/fitness.
Do you just add up all the tags of the two images?