"What determine's a show's merit?"
I determine a show's merit by (in this order)
1. the quality of the book, music and lyrics alone without any performers, directors or production values attached (including themes, messages, lessons, social commentary, etc.)
2. it's affect on theatre as a medium (whether that means popularizing it, reinventing it, etc.)
3. the staging of the show by the director and choreographer
4. the performers in the original cast
5. the production values and design aspects
6. the popularity of the piece
So, if you strip Wicked down to just the meat and bones of script, music and lyrics, it's not nearly as well-constructed as Avenue Q, the lyrics aren't as good, the story has holes and the music isn't centered.
Is you use just #1 and #2, I would say that Avenue Q is still in the lead, as Wicked has began another craze of people wanting to go to New York, but then again so has Avenue Q, and it's also brought a new form of performance (puppetry) to Broadway that hasn't been done before. Wicked hasn't brought anything new to the musical theatre medium.
If you use #1-#3, neither show had particularly brilliant stagings, but they both served the show well, leaving Avenue Q in the lead.
If you use #1-#4, both shows had perfect original casts. I'm not saying any were better, but they were all perfectly cast. Avenue Q is still in the lead.
If you use #1-#5, the design elements of Wicked are much more wide-spread than those in Avenue Q, but not enough to put Wicked over Avenue Q.
If you use #1-#6, both shows are playing to full houses. Wicked's response has been much more expansive than Avenue Q, but they're both selling very well.
All-in-all I would say that Avenue Q has the slight lead based on those criteria that I set up. Wow, I feel like I just wrote a term paper.
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