Lanie - Sable to Merle breeding is permitted and Sable Merle is an acceptable color (brindle is the only color disqualified outright in the Sheltie Standard I believe) but you rarely see them in the show ring. Why? Because "washed out" color, something you can get with a Sable Merle is a fault so they are very difficult to finish. It's also very difficult to tell a dog is Sable Merle so making the mistake of a Merle->Merle breeding is possible. (This reason is why some countries, like Denmark, ban breeding a Sable to a Merle.)