Someone sent me a Bookmarkshelf (.bkmslf) of 32,000 bookmarks last week.  He had successfully imported the mess from iCloud via Safari into this Bookmarkshelf.  I was able to clean them up using BookMacster in 15 minutes.  Indeed, we did have some beachballing…

mm:ss
00:57 Open Bookmarkshelf document
07:35 Find Duplicates
01:15 Delete All Duplicates
03:05 Consolidate Folders
00:01 Consolidate Folders again

Result: 2000 bookmarks, no duplicates.

However, this user, who had the same processor model and RAM as me, told me that it failed for him.  I'm not sure how long he let it go.

If indeed, it got stuck on 'Merging Folders' as you said, I think the solution is to give it more time.  An hour at least.  If you don't know how many bookmarks and folders you have, realize that if you have 20,000, there are 20,000 * 20,000 / 2 = 200 million possible duplications and a similar but not quite as large number of items in folders that must be merged.  You might want to quit other applications before you start.  Although it usually won't speed things up, this is in case things are worse than I thought and your Mac is not able to recover.  Certainly go do something else, away from your computer, while BookMacster is grinding on the mess.

If simply being patient doesn't work, here are some other ideas.

BookMacster can take a long time to load Sync Logs with huge files.  That's a performance issue that we need to fix.  As a workaround, while BookMacster is not running, open a Finder window to ~/Library/Application Support/BookMacster/, and delete all files named "Diaries-<whatever>.sql".  You might want to delete Logs.sql also, although that's less likely to cause a problem.  All of these files are historical records which you're not going to need under your circumstances.

Also, Mike, I don't recognize BookMacster getting stuck on "Bookmaster.plist".  There is no such file.  I suspect that maybe you're opening a Bookmarkshelf document which is configured to Import, Sort and Find Duplicates immediately upon opening?  Try to open the document with the 'option' key held down.  Then you can see from the top line in the Content how many bookmarks you have.  Also, this will prevent those actions so that you can see how many bookmarks you have, and then perform each of them manually, as in my schedule above.

If you still can't get it to work, give us a better description of where it fails, or send the .bkmslf file to support@sheepsystems.com, or click in BookMacster's menu: Help ▸ Trouble Zipper.  When answering the questions, include the .bkmslf file (Question F), or if you haven't imported the mess from Safari yet, include the Safari bookmarks (Question B), or both.  If the result is too big, upload to a Dropbox public folder, or http://sendspace.com.