Is it ok to set my physical stats to be extreme dump stats, or is there a minimum that'll help me get by easier?

I believe the merchant path is 100% combat-free, as long as you don't trigger any side combats (which should be obvious when you see them - so just avoid those). So in that case, as low as you want.

Technically, it's entirely possible to win combats with really bad stats (I believe someone completed the game with lots of combat despite not having any dodge/block or weapon skills) - but that requires some in-depth knowledge of how the combat works, and all the tricks (such as alchemy).

Note that for anything other than merchant (possibly thief? Can't remember), there will be some unavoidable combat encounters (if following your guild's path).

In that case, you may freely dump the physical stats.

ALTHOUGH now that I think about it, there are a few places where strength/dexterity/constitution can be somewhat helpful - still not combat, and definitely not essential or main quests - just some minor stuff you may not be able to reach (I can think of at least one, maybe two).

Having said that, they're not that important (you'll just miss out on some none-essential items). I'd not worry about them too much - just flag them when you encounter them for the future (possibly a loremaster run - ideally I'd do that after trying out most of the other options first, as things will make more sense then).

This game is definitely intended to be replayed multiple times, as it's literally impossible to see all its content in a single run anyway.

Awesome. It sounds like I'm in for a wild ride, even on strict pacifist mode. Thanks again for your guidance! Hope 2019 treats you well.