Pronunciation of vowel in vague as [æ] instead of [eɪ]

I don't see any merger there. All mergers occur between nearby vowels--near by in terms of tongue height, tongue place, and roundness/spread. Even the pre-velar tensing changes the low vowel to a step above--from /æ/ to /ɛ/. Maybe, he is using a spelling pronunciation of sorts: treating plague, vague as plag and vag respectively, with ue becoming silent. Sorry, I can't post this as a comment due to my low score here.

The last part of the podcast discusses this:

http://www.yorku.ca/earmstro/glossonomia/Glossonomia/Glossonomia_Podcast/Entries/2011/10/23_Episode_27__face.html

This sounds similar to the problems that Chinese speakers have with /e/ and /æ/ (see for example here). Essentially because the sound is not used in their mother tongue, it is confused with a similar vowel sound, in both listening and speaking. It could be that their dialect is so ingrained that they have this problem themselves.

I come from Toronto, Canada, and a bunch of younger people around here do this. Some speakers only do bag and vague, but I've heard some speakers pronounce bag, vague, and egg all with the same vowel, a sort of (really jarring) intermediate sound between bag and beg.

Check out the pronunciation of vague used on this site for language learners:

http://pronuncian.com/Sounds/Default.aspx?sound=33+6

As a Brit, this completely threw me, and was the reason for me coming here and reading all your posts.

This is odd for me too. Somehow, for me, plague could take either the vowel of vague or of bag when a noun (I would use the "vague" vowel if placing emphasis on the word), but only the vowel of bag when used as a verb. The sounds are not merged for me, and I don't know where I picked this up. I'm from Rochester NY.

Canadians, in my experience [I lived near Toronto for 39 Years], tend to make 'vague' rhyme with 'bag'.