I'd pack no Merfolk without GREAT use, so I'd probably lose Reejerey and School Master for that 1-mana Merfolk that mills when you play him, and possibly Familiar's Ruse (sinergy and defense). Also, I'd lose Banneret, making Dousing a 3-mana counter. Those counters are at their best in aggro decks, since it seals the deal early, so I'd switch it for Cancel. I'd pack Sygg, River Guide for defense and Mutavault for having more Merfolk out whenever needed. Milling decks tend to be control decks, so I'd probably pack 24-25 lands. 4 Jace is overkill, I'd play with 2 main and 1 on the sideboard. You also need some removal, I'd consider playing a set of Adarkar Wastes and Wanderwine Hub, losing 1 Mystic Gate and possibly play with 2 Reflecting Pools, and take a look at Condemn for main deck and Unmake for the side. Burrenton Forge-Tender should also be on your sideboard, and you could consider some artifact/enchantment hate.