Can I do SQL Server 2005 merge replication through an SSH tunnel?

When you talk about different locations for the servers, does it also mean different domains? Your comment on web replication is true, but applies only to the daily changes made to the database. Your initial snapshot can be of any size, even if it is a huge database. If your daily updates are limited (a few 1000's seems ok to me), go for it. It is quick!

EDIT:

There is a major domain/security issue when you begin to think about exchanging data between servers. If you need to connect servers belonging to different domains through a VPN or any dedicated link, and if you don't want to go through SQL Security (avoid it!), you will face specific (and licensing!) issues related to domain trust. One of the smart sides of Web replication is to avoid this kind of issue (and extra cost) by securing the connection through https protocol.