frontend/src/features/workspace/OutlinerBlock.tsx

@@ -598,7 +598,7 @@ export const OutlinerBlock: React.FC<OutlinerBlockProps> = ({
               block.collapsed && hasChildren
                 ? 'bg-accent ring-2 ring-accent/30'
                 : activeFocus
-                ? 'bg-accent scale-125'
+                ? 'bg-main scale-125'
                 : 'bg-faint group-hover/bullet:bg-accent group-hover/bullet:scale-125'
             } ${
               isEmpty

frontend/src/features/workspace/OutlinerTree.tsx

@@ -525,24 +525,37 @@ export const OutlinerTree = forwardRef<OutlinerTreeHandle, OutlinerTreeProps>(({
   const handleMergeWithPrevious = useCallback(
     (blockId: string, content: string) => {
       if (!canEdit) return false;
-      const mergeable = ['text', 'paragraph', 'bullet', 'todo', 'h1', 'h2', 'h3', 'callout'];
+      const notMergeable = ['code', 'divider', 'table', 'progress'];
       const visIdx = visibleEntries.findIndex((e) => e.block.id === blockId);
       if (visIdx <= 0) return false;
       const prev = visibleEntries[visIdx - 1].block;
       const idx = blocks.findIndex((b) => b.id === blockId);
       const cur = blocks[idx];
-      if (!cur || !mergeable.includes(prev.type) || !mergeable.includes(cur.type)) return false;
+      if (!cur || notMergeable.includes(prev.type) || notMergeable.includes(cur.type)) return false;
-      // Blocks with children would leave them orphaned at a wrong indent level
+
-      const next = blocks[idx + 1];
+      // Children of the merged block move up so they become children of the previous block
-      if (next && (next.level || 0) > (cur.level || 0)) return false;
+      const curLevel = Math.max(0, cur.level || 0);
+      const delta = Math.max(0, prev.level || 0) - curLevel;
+      const movedChildren: DocumentBlock[] = [];
+      for (let j = idx + 1; j < blocks.length; j++) {
+        const lvl = Math.max(0, blocks[j].level || 0);
+        if (lvl <= curLevel) break;
+        movedChildren.push({ ...blocks[j], level: Math.max(levelOffset || 0, lvl + delta) });
+      }
 
       const joinPos = (prev.content || '').length;
-      onUpdateBlock({ ...prev, content: (prev.content || '') + content }, true);
+      const mergedPrev: DocumentBlock = { ...prev, content: (prev.content || '') + content };
+      if (movedChildren.length > 0 && onUpdateBlocks) {
+        onUpdateBlocks([mergedPrev, ...movedChildren]);
+      } else {
+        onUpdateBlock(mergedPrev, true);
+        movedChildren.forEach((c) => onUpdateBlock(c));
+      }
       onDeleteBlock(cur.id);
       focusBlockInput(prev.id, joinPos);
       return true;
     },
-    [blocks, canEdit, focusBlockInput, onDeleteBlock, onUpdateBlock, visibleEntries]
+    [blocks, canEdit, focusBlockInput, levelOffset, onDeleteBlock, onUpdateBlock, onUpdateBlocks, visibleEntries]
   );
 
   const handleIndentBlock = useCallback(