I've been Pyro all this time, and I did good at finding the props he was hiding. Not to mention, putting out burning allies is a big +1. You can also lure him to you if you use your shotgun/reserve shooter (Though the reserve shooter is useless in this case, really), he goes for you, and you can withstand 2 spells or 2 melees from him. If the rest keep on attacking him while he goes for you, that's a great way.

The Ambassador Spy is suboptimal, I think. Vanilla knife/revolver and deadringer work if you are cautious enough.

Also: Never underestimate a good dispenser engineer with his pistol. That's a really good combo, even without his sentry (and when Merasmus is vulnerable, he's a deadly force and helpful healer).