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> Should i remove the failing drive from the mergerfs config and then rsync from the failing drive to the mergerfs mount point?
Sure. Or create a new, temporary pool with all the filesystems minus that one and rsync to that. That will allow it to happen while the filesystem in question is still accessible if that matters to you. Or attach a new filesystem, add it to the pool, and rsync directly to that. Really doesn't matter.
Not a bad idea although you can move files even while the drive is still part of your merge. Although this can put some extra strain on it.
If you want to be as gentle as possible a full drive image is usually your best option unless the drive is mostly empthy.