It looks to me like “Open in Editor” is doing something like directly opening the selected file on disk, rather than pulling the contents out from Git history, because when I click “Open in Editor” for files which have since been deleted, nothing happens.
I have confirmed that when I click Open in Editor for other files that are currently on disk, the Terminal editor opens the file.
I’m using Ubuntu 18.04 with Sublime Merge Build 1119.