The armor is inserted, not welded completely, therefore there will be no structural damage. If anything's likely to cause any structural damage, it's the projectile that hits the armor.
NxRA and NERA are highly energetic, but at the same time also highly contained, and not nearly as volatile as an ERA might be. SLERA is also somewhat contained but not on the same level as NERA and NxRA.
Even ERA can be fully contained via thin metal plates.
This is even less of a problem with modular armor. The T-14 for example, which puts all of its armor at the hull, is said to use a modular armor construction, which means it's fastened to the hull but not integral to it.
Due to the distance between the LFP and the crew compartment, and the angle at which the shell will impact the LFP (note: to hit it, one must aim downwards), the likelihood of the projectile even reaching to the bulkhead that separates the crew from the engine compartment, is extremely low.
I already explained why this picture is wrong. The tank on the middle left photo where the crewman is inside the engine compartment, is not a Merkava 4, but a Merkava 3.
And the Namer and Merkava 4 are not identical. The Namer is built on the basis of the Merkava 3 to accommodate its 1200hp AVDS-1790-9AR engine, and thus has different automotive components. Most of its automotive parts are non-interchangeable with the Merkava 4.
That is also a myth. The technology for composite armor existed. It's just that the production capabilities for composite armor didn't fully exist by the time the Merkava 1 was scheduled to enter production. They were however added on the Merkava 2 in 1983 when the first units started rolling off the production line. The Merkava 1 could also be augmented via ERA, but its protection was deemed adequate at the time. The requirements were protection against 115mm guns (T-62) at combat range, and AT-3 Sagger missiles and RPGs. This protection capability was demonstrated in combat on numerous occasions.
There is a difference between frontal surface, and frontal surface that needs to be armored. Due to the main threats (to the hull) were APFSDS hitting the tank in a normal combat position (semi-hull down), only the UFP required protection. More specifically, the upper portion of the UFP. Therefore while the LFP may not provide good KE resistance, the UFP and primarily the upper part of it, provided good protection.
Protection scheme was built around the findings of the ballistics research team that analyzed thousands of damaged and destroyed tanks during the Yom Kippur War, and later the Merkavas that were hit in the Lebanon War. The result was that the main threats were shots coming at a slightly elevated angle, which also explains why the UFP of the Merkava extends above the turret ring:
All efforts to up-armor the Merkava's hull front also always focused entirely on the UFP:
(Prototype likely for testing of armor for Merkava 4A, date unknown).
The armor of the Merkava 1-3 tanks at the hull may seem rather thin compared to contemporary tanks, but that is what was considered adequate at the time for the then-modern threats.
Merkava 4, for example, represents a major leap in protective capabilities, and features armor thickness slightly above average, and it was done merely by shifting the location of some fuel tanks and batteries a bit to the back, something that can also be easily done on Mark 3 tanks.
The choice to keep the LFP protected mostly by fuel tanks, another bulkhead, and then the engine instead of thick armor, was not in any way due to engineering limitations, but voluntary.
By the way, the teams that studied the damaged and destroyed tanks of Yom Kippur, in their results came to a conclusion that damage to the engine compartment/powerpack, constitute a slightly smaller percentage of immobilization than rounds piercing to the crew compartment. And judging by the requirements for each tank, and protective qualities that could be afforded by them and contemporary designs, there is no reason to believe there would be any substantial difference in the armor thickness if the Merkava was designed with a rear mounted engine.
So not only was the front engine location an intentional decision rather than a compromise, it was deemed better than the alternative on multiple instances, when the Merkava 3 was designed, then when the Mark 4 was made, and now when the Rakiya is in early development stages. The Mark 3, 4, and Rakiya were pretty much clean sheet designs that are not interchangeable with each other nor with past generations.
One last thing, the front engine design did not draw its protective qualities merely from the engine. The concept was to use EVERY possible module for the protection of the crew, and thus the Merkava is said to utilize about 75% of its weight directly for the protection of the crew, whereas contemporary designs usually stand at around 50%. This includes fuel tanks, batteries, wiring, water tanks, etc etc all located on the sides and belly to protect against RPGs and mines.
Even the spring suspension was favored over the hydropneumatic one (It's known that a single Merkava 4 prototype with hydropneumatic suspension existed and was rejected) because it provides physical protection in the form of springs located externally (contributes to maintenance as well) and made of armor-grade steel.
The fuel tanks were placed entirely in the hull where they were of no danger of being hit by rounds penetrating the turret (the most exposed area), and at the rear they were considered less vulnerable even to hull shots when taking into account ballistic study results of past damaged tanks (frontal arc is viewed differently depending each tank. Some say 15°, some 30°, some even 60°). Other countries' requirements would likely determine it is more vulnerable. They are still however protected by extra modules such as the NBC and APU, tanks, etc.
EDIT: UFP pic because it seems to be missing: