The flaw i see is why could the super happies not make separate decisions for humanity and the baby eaters.

I don't follow. They waged a genocidal war against the babyeaters and signed an alliance with humanity. That looks like separate decisions to me.

And why meld the cultures? Humans didn't seem to care about the existence of shockingly ugly super happies.

For one, because they're symmetrists. They asked something of humanity, so it was only fair that they should give something of equal value in return. (They're annoyingly ethical in that regard.) And I do mean equal value - humans became partly superhappy, and superhappies became partly human. For two, because shared culture and psychology makes it possible to have meaningful dialogue between species: even with the Cultural Translator, everyone got headaches after five minutes. Remember that to the superhappies, meaningful communication is literally as good as sex.