Me and Merovee
So when it comes down to it, Europe was born the child of a giant five-horned sea monster, and it's founder was Merovech, or maybe Merovee. We've briefly mentioned the story before, when we accused Napoleon of making a Faustian deal with a Dagon-esque Quinotaur in a bid to become emperor of Europe, but let's go over it again anyway. A 5th century Frankish king named Chlodio conquered a good chunk of what is today France and Germany, defeating the Romans only to be later defeated by them. His (or at least his wife's) descendants would go on to conquer still more of the continent, and otherwise laying the ground work for the evolution of modern Europe before being slowly deposed by the Carolingians (who are, for some reason, rarely the subject of secret histories and/or conspiracy theories, with some notable exceptions).
My Father Was a Sea Monster
In any case, Chlodio is of interest to us not only because his own actions are noteworthy, but because his supposed heir may have been fathered by a five-horned sea-bull that assaulted (or seduced) Chlodio's wife during what must have been one of the more ill-conceived beach visits the world has ever known. The historicity of this event could perhaps be doubted given it's obvious parallels to the Greek myth about Zeus's kidnapping and seduction of the princess Europa-- itself heavy with cultural symbolism -- but perhaps that's just how the gods like to do business. Shameful, I know. Regardless of his questionable parentage, Chlodio acknowledged his wife's son -- Merovech -- as his heir, leaving the potentially semi-deific young man in possession of a massive European kingdom upon Chlodio's death, and founding the royal dynasty that bears his name: the Merovingians.
...Unless He Was Jesus
The legend has been assigned a variety of meanings in the annals of European secret history, but the most prominent -- made famous by Dan Brown's execrable Da Vinci Code -- is almost certainly the claim by Michael Baigent, Richard Leigh, and Henry Lincoln in their Holy Blood, Holy Grail that the tale is a cover for the real secret: that Merovech is a descendant of Jesus Christ. After all, didn't early Christians use the fish as a symbol? According to Baigent, Leigh, and Lincoln's book, the infamous Priory of Sion was founded to protect the secret of the Merovingian's lineage, with the Knight's Templar serving as the muscle for the Priory's brains. The general goal of the conspiracy was to install members of the family on essentially every throne in Europe, which they would then unite and rule with enlightened benevolence. Hooray. Of course, neither Brown's novel nor Baigent, Leigh, and Lincoln's "history" are quick to admit that early Christians did not, in fact, use five-horned aquatic tauroids as a symbol of their faith, but I suppose it is important to remember that close counts in horseshoes, hand grenades, and also conspiracy theories.
Regardless, for just one crazy second, let's consider the possibility that for a game of intrigue, horror, or mystery set any time post-500 AD the most interesting interpretation of the legend is the literal one.
Kings Of and From the Deep
In your game, Chlodio's wife -- whose identity is conveniently lost to history -- could be an initiate of any number of mystery cults or lost religions dedicated to old gods (or for that Lovecraftian flair, Old Ones), deliberately seeking to bear the son of a submarine god to ensure the prosperity of her line. One might suggest Astarte as a worthy patron, particularly if in your game the encounter with the Quinotaur was a deliberate mystic rite. Even if we accept that Merovech's semi-divinity was less intentionally begotten, the family's subsequent link with powerful creatures of the deep should be obvious. The Dynasty's reputation for palid complexion and long hair might, when taken as a whole, suggest an effort to obscure vestigial aquatic features (like gills) from otherwise normal human subjects, perhaps borrowing conceptually from the Innsmouth Look. This last idea is certainly not out of the question given the dynasty's additional reputation for sorcerous talent.
Then again, since we've previously suggested that there was some noticeable extraterrestrial involvement in the development of later Franco-German history, you could also give Merovech's nonhuman parentage a more obviously alien flair: maybe the amphibious Nommo -- supposedly from a planet in the Sirius system -- operating a little outside their traditional territory in Mali? If so, their magic powers could really be some advanced technology gifted to the family in exchange for a much-needed influx of human DNA, carefully hoarded by the family and its guardians for the following 1500 years.
It's worth noting that in the parallel myth surrounding Zeus's seduction of Europa, the lusty god rewarded his conquest with rule over Crete, a giant bronze robot guardian, a hunting dog that always caught its prey, and a magical spear that could not miss it's target. This last is, of course, reminiscent of the Spear of Destiny, which also fits nicely with the "Holy Blood" version of the tale. Why not have your cake and eat it, too: steal the magical gifts from the Europa myth to explain the dominance of the Merovingians. If your undersea gods are extraterrestrial and not supernatural, these gifts can of course be technological, instead.
Still Hanging Around
Your Merovingians can be sinister or benign, but no matter what they should be weird. It may be that nonhuman intellect is the only thing that can truly explain why the dynasty allowed itself to overtaken so easily by the Carolingians, despite their powerful heritage: though one imagines that they may have decided that real power lay in the shadows, continuing to exert direct -- or eldritch -- influence over regional (and then global) affairs.
Indeed, even after the Merovingians themselves disappeared from the global stage, numerous reminders of the powers wielded by creatures of the deep remains strong. Essentially every castle in the Rhine valley -- at one time Merovingian territory -- still occupied as of the 15th century has at least one Lüsterweibchen hanging from its rafters: candle-holding chandeliers carved to resemble human-fish hybrids with antler "wings." Perhaps hinting at celestial origins of one kind or another? I'm sure you already beat me to it, but the fact that these aquatic effigies serve consistently as "light-bearers" gives you a perfect segue to introduce the Illuminati, either as agents or enemies of the hidden -- but eternal -- Merovingians.
And then there's the persistent legend of the Lorelei - a sinister siren known to lure sailors passing through the Rhine gorge to their deaths for her sadistic pleasure...or perhaps as sacrifices to distant patrons. The Merovingians, perhaps?