Merge, reintegrate, and merge with tree conflicts

We are seeing merge tree conflicts where I believe svn is not working
as expected. I'm not entirely sure if this is due to a lack of
understanding for proper use on our part, but it was my understanding
that reintegrate was to be used when pulling changes from a branch and
pushing them into the copied from branch.

The problem can be reproduced by creating a branch, add and committing
a new directory within the branch, reintegrating the changes to the
originating branch, then merging any new changes from the originating
branch into the branch with the changes.

I've included the following script to regenerate the issue two
different ways - the first is the most simple way I can think of the
reproduce it, and the later is a simulated structure of how we are
using svn and how I found it.

Any advice?
-Jim