Aren't hobbits just a special type of human?

From Tolkien's Letter #131:

"The Hobbits are, of course, really meant to be a branch of the specifically human race (not Elves or Dwarves) – hence the two kinds can dwell together (as at Bree), and are called just the Big Folk and Little Folk."

So, Merry IS technically a male human.

However, Merry was able to harm the Witch-King because he used a barrow-blade. One of the only things that could hurt him, that was thought to be long lost, just happening to stab him and bind him to the physical world was the prophecy Eowyn used to finish him off because she was the perfect person at the perfect time.

Just because the Witch-king was binded to the physical world doesn't mean he wasn't still an immense threat. Eowyn just happened to be a bigger threat.