The funny part is that there are tools in the UE5 editor that allow to merge geometry instances, though, I wasn't able to utilize them for HW RT acceleration purposes in the Valley demo

Yet, merging geometry instances sounds like a task that can be automated, and in fact it has already been accomplished for the distance fields volumes.
I understand that merging 3D volumes should be a way simpler task than merging polygons, but Epic already did the impossible with Nanite, so merging poligonal geometry doesn't sound unrealistic to me)