Mono, thanks for the reply! I realize now how unclear my first post was... My main issue is with the color of the merged highlights. Once merged they are a dark muddy color which obscures the text. (I attached a couple examples in the first post). Do you know how if this color can be changed? Is that the normal color for merged highlights?
I don't actually have a problem with missing spaces in the text file - that works great as long as the OCRed PDF is of good quality. The spaces are only missing after merging (when viewing highlights and annotations in Preview, Acrobat, etc.)
I would guess that these missing spaces have to do with the 'highlight text fragmentation' issue. Which is something that would be nice to have fixed, but is secondary to the obscuring color issue.
Sorry for my lack of clarity! I hope this makes more sense now!