RTC does a pretty good job of auto-merging changes from other developers that come into your sandbox. Sometimes though, you're in the middle of a developing a new feature and one of the team helpfully decides it's time to refactor everything :) That's when you're in trouble with merge.
I recently went through this with some relatively fresh code and ended up just accepting the proposed changes, totally over-writing my own. I knew my changes since last delivery were fairly small to the files I'd accepted so I knew the refactoring was more important and too difficult to merge using the RTC merge tool (grey boxes and lines everywhere!!).
Eclipse local history to the rescue! I knew I hadn't lost anything and could do a manual compare with local history and see more clearly the changes I had made and copy them across into the newly re-factored code.