JP2 images can be loaded up into ArcGIS for Desktop, and served up as a cached map service within ArcGIS for Server
the rasters are purely for reference. The aerial images are merely to
look at. like google satellite view
Then there is no need for serving these up as Image services. This is a common mistake, as people believe that as its imagery, it should of course be served up as an image service. You should serve these up as a cached map service, choosing the JPG type to create tiles in.
if the purpose of your imagery is only for visualization as a base
layer and you expect moderate to high amounts of traffic on your site,
you should attempt to use a cached map service for the imagery. If you
want to expose analysis and manipulation of the imagery and you don’t
feel that your server will be overwhelmed by concurrent requests, use
an image service.
Highly recommend reading this blog post.
You do mention that you have had some issues with merging the rasters and pulling into ArcGIS for Desktop? Is there a need to merge the rasters? You should be able to keep consistent colour ramps across the separate datasets to avoid merging into one file. I have served up services that contain datasets of this size or larger, just remember to ensure you do not 'copy data to server' and you have the source path of the data registered as a registered data store with ArcGIS for Server