This deletion of in first appeared in the 1837 edition and was not marked by Joseph Smith in the printer’s manuscript. There is nothing wrong with the syntax of “in that perhaps the Lord would be merciful to them”. The dropping of the preposition in could in fact be a typo in the 1837 edition. There is no reason for not restoring the earliest reading here.
The use of “in that” (where that is a conjunction) is found nowhere else in the Book of Mormon text. On the other hand, there are many examples of “insomuch that”. One possibility is that “in that” in 1 Nephi 8:37 is an error for “insomuch that”. In the original text, there are 176 examples of “insomuch that”, but none of these are followed by perhaps—which suggests that “insomuch that” is determinative and does not permit mere possibility (as here in 1 Nephi 8:37). Moreover, there are no examples of the text switching from insomuch to in or vice versa. The phrase “that perhaps” occurs 26 times in the original text, but “that perhaps” is never preceded by insomuch—or in. Even though it appears that the expression “in that perhaps” is unique here in 1 Nephi 8:37, it should nonetheless be restored to the text.
A similar case where in has been lost before a subordinate clause is found later on in the text:
In this case, the appended clause is participial and thus differs from the that-clause in 1 Nephi 8:37. And in the example from 3 Nephi 3:11, unlike the one here in 1 Nephi 8:37, the in seems necessary. For discussion, see 3 Nephi 3:11.
Summary: Restore the reading of the manuscripts for 1 Nephi 8:37 (“in that perhaps the Lord would be merciful to them”).