I live in Hawaiʻi and I myself can speak the Hawaiian language. The reason merry turns into mele is because the translation of the word "merry" into hawaiian is "mele". You were right when you said that mele means a song or poem, but the thing with the Hawaiian language, one word can have multiple definitions. It all depends on how the circumstance you use the word or the scenario. Therefore, using the same word for different definitions may not be as confusing as it may seem, if you use it correctly. So you can use the word "mele" when speaking of a song, but in this case the word "mele" is used for the word "merry".