If you want to sync directly from iPhoto to iCloud, then yes, you will need to upgrade. I haven't encountered any difficulties with iPhoto, though I don't know specifically what you're referring to. You might find more useful commentary and suggestions in the iPhoto forum.
As to your second question, I don't know where you heard that, but it's wrong. It is still not possible to merge Apple IDs.
I was told by an apple technician ona recent call, he said they know it is a big problem and it is definitely being fixed but they do not want to commit to a date. Sounds like it will happen.
With regard to iPhoto, the comments were all on the forum with the app store, almost all negative. I know it has been upgraded though so maybe the issues have been resolved.
I just don't want to for the iPhoto upgrade if I mountain lion will allow iPhoto to sync through cloud automatically?
Apple techs will not know such things, generally, so I really doubt anything a first-level tech tells you. But perhaps he was right. We'll have to wait and see.
Again, if you want iPhoto to talk to iCloud Photo Stream, then you will need to be running iPhoto 9.2.2 or later.