1 - Someone who sells false promises. Someone who deals in imagination, and whose actual product is not really very good. Possibly a scam artist. "Merchant" is frequently used in a negative way. This is just my opinion. It's a metaphor, so the context is important. Is this the title of a children's book, or the nickname of a drug dealer?
I think a "one man industry" refers to an industry built around one person - someone so influential that they should almost be classified as an industry in themselves.