Not sure where you care looking to say "nobody has answered the question..." as they are common questions, answered many times over.
"There are boxes to be checked etc. " On my AX88U, I only have 1 check box. Beside it, it says "Click on this checkbox if you want to share the config file for debugging. Since the original password in the config file will be removed, please do not import the file into your router." which would not seem to apply in your use case.
"Will I be able to use settings backup now on a new release when ready?" Personally, I rename my config backup files to include the version of FW that it was saved from. In an ideal world, it should not matter, and most of the time it does not, but, the configuration information is not "parsed" as text, xml, etc, but is stored as binary data, so you should try and stick with backups that were created with the same version of FW. It may work, or it may result in odd behaviour which will necessitate and reset and manual reconfigure. It is generally a better practice to update the firmware, then save a new backup and keep the various backups associated to the corresponding FW, just in case.
"Nobody has answered the question as to if the router needs to be factory reset after the new flash." The general answer is that no, you only need to reset and manually reconfigure *if* your router is responding in a way that is unusual.
"Will I be able to use settings backup now on a new release when ready? " You seem to be confusing things. Whenever you change FW versions, up or down, Asus to Merlin or vice versa, generally the configuration settings *in the router* adapt automatically and this process is not related to loading saved configurations. If the FW change process is not compatible with the router settings, then this will not be resolved by loading a saved configuration for reasons stated above.
Best practices (IMO), any time you change the firmware, save a configuration backup and note the FW version that was active at the time. Try to only load backups that were created with the same FW. Worst case, write down your settings or save screen captures for reference *in case* you need to do a full reset and manually reconfigure for one of 1000 different reasons. (Personally I like to save it as a PDF for easy future reference)
If somewhere in there you care asking if you can save your configuration and load it on your neighbours router, I would strongly advise against it.