Combine water and sugar in a small saucepan. Bring to a boil; reduce heat, and simmer 3 minutes. Remove from heat; stir in ice cubes.
While sugar mixture comes to a boil, grate rind, and squeeze juice from orange to measure 1 tablespoon and 1/2 cup, respectively.
Place cherries and sugar mixture in a blender; process 1 minute or until puréed, stopping as necessary to scrape sides. Stir in rind, juice, and merlot; pour into an 8-inch square pan. Cover and freeze 8 hours or until firm.
Remove mixture from freezer; scrape entire mixture with a fork until fluffy.