So, I'd say that, by default, Merciless always applies if you have it. I say "by default" because I can imagine situations where the big, mean brute is acting with mercy.
But, let's take a look at how that situation should actually play out.
An example of mistake & correction, with Merciless:
Rolfball: Okay, so, I want to shoot out her kneecap.
MC: Yeah? Well, since she's barring the door and has a chainsaw out, that's probably Seize By Force.
Rolfball: Okay, cool. I'm hoping that this isn't going to kill her, it's just going to leave her wounded and helpless.
MC: Wait, wait. What? You have Merciless, dude. If you hit her, she's dead.
Rolfball: I don't want that.
MC: So, you're trying to not kill her? Because you want to get something from her?
Rolfball: Yeah.
MC: So, you're going aggro?
Rolfball: Hm, yeah. That makes more sense. Instead of shooting her, I'm just going to fire the gun into the air, and wave it around menacingly. I want her to step out of my way and let me through.
MC: Cool. Roll it.
There's already a move for when you want to show mercy on someone in a violent situation. It's called going aggro, and it's where you threaten people but give them an easy out. And if you want to avoid inflicting +1harm, just go aggro without inflicting any harm: wave a gun around like a motherfucker.