I'm pretty sure there are more than 20,000 polling workers in the USA, so no, it's not 99.9% who go home and trust. And most importantly, for every republican there is a democrat and vice versa, in every polling place, auditing the process in real time.
And the reason you can fix this at the polling station level is simple: as long as the entire state is not captured by a single party (in which case no real elections are happening), the rest of the state can come in and fix the bad locations.
Related to your points:
1. If there are more ballots than registered voters, this is easy to check. It's even better than a private key system, as extra registrations can also be caught on the day of polling, if people actually come in and vote again, whereas extra private keys being handed out will not see an election official again.
2. There is no way to actually "prove anonymously how you voted". To move the needle in any way, you have to come out personally and say "I know I voted like this, but the system shows me as voting like that, here is what it shows when I present my private key". And either way, this is actually a weakness of the system, as it allows trustworthy vote selling.
3. I don't understand how this is supposed to be any easier than in the current system. You still won't know how many people were legally allowed to be registered in that district, so what are you comparing against?
4. No, the threat surface is the entire electronic system. Someone can attack the system and prevent voters from getting private keys, issue corrupted keys, allow more keys than were registered, present the results differently from what is stored in the merkle tree, use side channels to decrypt private keys, exfiltrate data about individual voters, and who knows how many other ways. Plus, if you can vote from anywhere, you can be coerced, especially by family or caretakers, to vote in their presence, or disclose your private key so they can vote in your name themselves.
And all this assumes the system is an actually secure Merkle tree. In reality, it would just be a computer program that takes your vote and shows you some data. What is actually running on the server is impossible for you to know unless you are given access to the hardware and software.
5. Sure, this is a clear advantage.
You are severely underestimating the risks of an electronic system, and only looking at the purely theoretical logical core. All of the systems around it, through which you interact with the core system, and all of the human factors around using the systems, are a huge attack surface. For example, would you trust this system and issue your vote from a phone or PC which you know is infested with malware? If not, then you have to agree that every device is part of the attack surface of this system.
Finally, in relation to your challenge, elections held by dictators are only meant to look like elections in more legitimate countries. So, if most countries hold paper elections (which is by far the majority), then the dictators will put on a show like that. If the majority of countries used electronic voting, dictators would also get electronic voting machines. Still, I don't know of any dictator that bothers to make a show of how free and correct are their elections.