I always run meph without the merc as he's more of a liabilty than an asset.
Holding onto it for now is probably best.
Hmmm, Insight CA is a bit slow, so the 5% (iirc) life leech on the helm won't be super effective. Maybe you should farm NM Meph until you can get a helm with more life leech, but I don't recall exactly which uniques can drop in NM. Do you have any body armors with life leech?
Maybe he's just not high level enough to survive? What level is he? Also, you could avoid letting him get swarmed by teleporting half a screen away. I don't remember if you're in LoD or D2R, but in D2R, you can make Insight in a bow and use the act 1 merc. You can then train yourself to run without a tank, though that'll take quite a learning curve. Hmmmmm, I wonder if an Insight Rogue is actually the best merc to run Meph with?......
In general, the act 2 merc can't help you kill meph faster. Run Meph without the merc and it will go much, much better as long as you use the Moat Trick. You can also reroll maps until you get one that has a short travel path, then you can just use pots or wield an insight yourself for the travel part.
With my fire sorc, I get 25% mana regen from Magefist, and that seems to be enough to only use one or two pots per run. She isn't geared up atm, but that's all I can recall having. Using some mana charms to get a larger mana pool will increase your passive regen. I assume that you have a point in Warmth.