This is very good question - thanks for bringing it up now!
WinMerge 2.x Open-dialog has quite a many problems. And it is constant battle against people wanting even more features into it! Where areas it should be very simple dialog everybody can use without thinking about it. It is the most used dialog and one people see first when they start using WinMerge.
I've been thinking about this one/two dialog problem. And I'm still undecided about it myself. There are strong pros and cons.
I think I've slightly in favor of two dialogs. But it doesn't allow selecting file from side1 and then only directory from side2. Then WinMerge would select the same filename for side2 than selected for side1. This works nicely in WinMerge 2.x. However I'm not sure how important this use case is after all.
For single dialog approach I've seen couple of solutions by other programs. And I haven't really liked then. Either they have many buttons or tabs or such. Which IMO clutters the GUI and makes those dialogs harder to use. If you need to think if you press "file" or "directory" button or if you need to switch between tabs its not something you want to do all the time. Just to open two files or directories.