>We want to set up 3 different servers with MSDE and sync them using replication. Using merge replication, is it possible to have changes distributed from all 3 servers. I guess what we are asking is if it is possible for MSDE to be both a subscriber and a publisher.

This is one of the limitations in MSDE in difference of SQLServer.
MSDE has not replication.
You have to buy SQL Server or to develop a synchronization application
HTH