I have been trying to find information about this all over the internet and so far I am coming up short. There is a discussion about this over on fanres and thanx to Servo and the draft he pointed out (which is included in PDF format with this release) where there is evidence of the fact that this dialog did exist. It’s also present in the French and Italian dubs but NOT on the subtitles for either one of those languages, nor is it present in any other dub and I have a huge amount of dubs to compare with.

Here, I have a couple of theories:

a) the dialog was recorded and present in the theatrical release and over time, the master audio track got damaged, so Disney wasn’t able to include it (it’s never been present on any English home-video release in any format, including Laserdisc and first edition VHS tapes)

b) the dialog was recorded and dropped very close to release, but after the French and Italians already had a copy containing the dialog, so it was dubbed and no one noticed.

This one is a hard call because evidence leans toward the second option by the fact that no other dubs contain this dialog and even the dubs that do, don’t contain the dialog in the subtitles. On the other hand, this scene always seemed like the dialog starts abruptly (where if the entire dialog is included, the conversation makes more sense) AND you can CLEARLY see Merlin’s mouth moving in that shot. Obviously it was animated for the dialog to be present and the draft verifies this, so… yeah, without any other concrete source of information this is all just speculation. The ONLY way I could see verifying if it was, in fact, present for the theatrical release is to get a 35mm (or 16mm since the audio here is more important, as the video on my release is good enough) of a print from the original release back in 1963.