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Consolidating Service Desk and Desktop Support. Your thoughts, please?

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I would suggest to you evaluate the difference between activities performed by the service desk & the desktop support team. Service desk guys are good at communication, efficiently handling customers, coordination and follow up. On the other hand, technical guys might not be so skill on these qualities instead would be good at troubleshooting technical issues.
If you are trying to combine these teams, cross functional training would be required. Also, you have to live with some degraded quality on service desk and also on the technical front.
As I said earlier, it depends on the how much difference is there in the skill of these teams. Wider the difference, more difficult to merge.
If L2 team is comprised on guys with technical certifications like MCSE etc. it would be difficult. Also, there would be team motivational challenges when technicians are asked to do service desk work.
Reduction in cost could be done with adopting technology that can help standardization. L2 should continuously work on developing knowledge base and there should be continues process of moving activities from L2 to L1.