you are most definitely can use AND/OR condition in the ON clause 🙂
I have been using them forever...
also you can use an AND in MATCHED stmt.
Like so:
MERGE T
Using S
ON
t.col = s.col
WHEN MATCHED AND <otherTcol = otherScol condition> THEN
Update blah blah blah
but very cautiously
that part of MERGE is not always working as desired/expected.