I'd honestly have no problem with merging into the town, as it is a local landmark. It shouldn't break the GFDL even if the article is deleted, as the revision history is now available to all for deleted articles.
Probably the best way, then, to work around the poisonous dysfunction of xFD is to make the deletion moot by merging it into the town article and making the name a redirect.
Alas this isn't deletion-proof. I performed a merge not so long ago only to have it reversed out as the article was *still* deleted (and on a second go, too, because somebody decided the keep result wasn't to his personal taste!)
Sounds very like an obsessive deletionist who's more concerned with process than product. AFD seems to encourage that sort of thing.
That has nothing to do with AFD itself. More with whoever decided merging wasn't appropriate. If a traffic circle has been established as a local landmark I'm all for merging it and if I'd known about it before I would've supported it on the talk page in question.
--Mgm