This is a framework that shows you how to have almost limitless amounts of plugins.  I decided to do this after almost 2 years of trial and error that showed me there's some incomplete, and in some cases incorrect, advice on the internet.

Howto merge almost infinite plugins for Skyrim VR (and other versions also) v. 1.5 (additional info)
The problem: Skyrim VR treats ESLs just like ESPs,so there is a hard 256 plugin limit (and ESL-ing stuff can’t save you).

The 2nd problem: there’s a lot of bad or incomplete advice out there on how to get around this.  For example, I’ve read you can’t merge more than 512 plugins, even if they’re disabled. Meanwhile I’m running OVER A THOUSAND just fine plus working on more…

Here is the solution I’ve found after almost two years of troubleshooting, plus some questions and feedback received after version 1.  Figure I’d post it here to help anyone else with the same or similar problem (this should also work for non-VR users if for some reason ESL is not an option).  Note I use MO2 so this might be a little different for Vortex users:

1.     Download zEdit from Mator at Github here: https://github.com/z-edit/zedit/releases

2.     Get it to work for Skyrim VR.  This worked for me: https://www.reddit.com/r/skyrimvr/comments/qkky20/zmerge_skyrim_vr_help/

3.     Watch a tutorial on how to use it.  I personally prefer Gamer Poet: https://www.youtube.com/watch?v=oQ1mdOGosdc

4.     Now, Mator hasn’t updated zMerge since Aug 2021, and it wasn’t quite polished yet.  The biggest problem it has is that there’s no good way to filter plugins like you can in xEdit or the Creation Kit, which is super problematic when you have hundreds if not thousands of them.  Fortunately there’s a solution.  Go to the zEdit site in #1above and look at the “pull requests.” Here you can see and download mods to zEdit that add more search filter capabilities to the tool.  Not absolutely necessary,but helpful.

5.     Ctrl-F will open the search filter for plugins in zMerge on the plugins tab.  Note there is no “go to next” feature, so you have to type out the whole plugin sometimes.

6.     Now you’re ready to do the magic!  Here’s what I do:
        a.      I still don’t recommend trying to merge mods that are new lands, updated frequently, have tons of scripts or are mods which are popular requirements with other mods and modders (examples like WACCF, ACE, USSEP, SMIM, etc.). However, I have still been able to merge many (but not all) of those types with success using this method.
        b.     While conventional wisdom is to merge mods that are related, I’ve found with this method that’s less necessary (still advisable though).
        c.      Copy your profile in MO2 and use the copy version to work from.  This is extremely useful if you screw something up since you can go back to the original profile with the mods in the original order and original plugins enabled/disabled where you began at any time.
        d.     If you have mods that require patches, you can now enable all mods on left and right side (in your dummy copied profile). Then run those FOMODS.  Examples like Lux, JK’s Interior patches, Legacy of the Dragonborn patches, etc.  This will ensure you have all patches to all mods you want.  Then disable back down to256 or below.
        e.      Group the mods you want to merge together on the left side and create a separator before/after to mark the merge that is taking place.  Note, sometimes they might not be able to be moved there.  Great example is Wheels of Lull, which comes with 2 plugin patches out of the box.  You don’t want to merge the entire mod, but can merge the plugin patches just fine.
        f.      Create your merge in zMerge of those plugins.
                i.     Use the “clean” vs. clobber method.
               ii.     Don’t merge more than 256 plugins.  You will get an error as zMerge can’t handle that many in a single merge.  Sorry, but you have to break up your merge in less than 256 per merge.  That means you can only have 256 X 256 plugins = 65,536 plugins.  I call this “almost infinite,” but if you disagree, too bad.  Blame Bethesda for this whole problem.
              iii.     Alsonote, if you’re merging a patch for a mod, that counts as TWO plugins since zMerge has to do calculations for both (even though the parent mod is not being merged).  So for example, if you’re merging all the Legacy of the Dragonborn patch plugins, that’s about double the amount of just the “DBM” patches due to zMerge pulling in all the parent mods to assemble the merge. 
              iv.     Relinker:90% of the time you don’t need this.  8%of the time it produces a script that you already have.  But a few times on more complex merges I found it actually did produce something the original merge did not.  So I always recommend hitting relinker.  If it does yield anything useful, you can usually drop it into your merge folder’s script folder, but if you want to play it safe then I don’t recommend merging whatever mod requires relinker.
        g.     Zip your merged folder and drop it into MO2 downloads.
        h.     Place your merged mod *on top* of the group of mods on the left in MO2.
        i.       Now, leave the merged mods themselves all enabled on the left under where you just put your merge, but disable their plugins on the right (assuming zMerge didn’t do it automatically, I’ve found this hit or miss).
        j.       Run LOOT.  Yes, I know LOOT isn’t always right, but that’s where you should be able to use metadata to put in your own rules.  Full disclosure, I’m still using an older version of LOOT (v. 0.16) because I did not like the massive changes in v. 0.18 and metadata rules did not seem to work plus were deleted when I upgraded, so I rolled back to v. 0.16 which works great for me.  I recommend you try the latest version of LOOT, but realize future upgrades may take out your metadata like it did me, or may not work… so upgrade with caution or try v. 0.16 like I use if you have problems.
        k.     Test your merge.  If there’s a problem, 70% of the time it’s your plugin priority on the right, 10% it’s your mod order on the left, 10% it’s your plugin order in your merge. Typically you want both left and right side toward the bottom of your order/priority, but not at the very end.
        l.       Once you’re solid, make that copy your original MO2 profile.  I also take a screen capture of the merged plugin list so I can go back and validate what I merged whenever necessary.

Q&A

Question- My merge causes errors/CTD/won’t work.

Answer- I’ve found merges over 10 GB can cause problems (though I’ve successfully merged up to 35 GB).  Try to keep your merges under 10 GB.  If that doesn’t work, check your plugin load order in the zMerge load order tab (not to be confused with your MO2 load order).  Try different combos of order based on LOOT recommendations in the zMerge load order.  That should eventually solve the problem(though it can take a while).  If that doesn’t work, deselect plugins that have scripts, especially ones that only relinker will catch.  Those mods are probably problematic to merge as very complicated mods. Finally, if none of
that works and you’re at your wits end, try taking out plugins to find which ones are causing you problems, then either order those first, last, or take them out completely. 

Hope this helps!