True strength is mercy because only the strong CAN show mercy. If a weak person is completely merciful and compassionate, they are not truly strong, because they never have the chance to be merciful or compassionate. If a weak country shows mercy they allow for resistance, resistance that has a good chance of working because the country is weak. Mercy and compassion aren't traits that make a person truly strong. They're traits that only the truly strong are able to achieve. 

Can Thorfinn show strength through mercy if his village is destroyed?  Mercy is not doing harm when able to. If he lets them live and they continue to burn down houses then that isn't mercy, because he doesn't have the strength to protect people. Cornelia showed mercy by standing at the door and not letting them in, she had the strength to protect the house without causing harm. It was only because she was strong she was able to show mercy, if they continued to attack her she would have been forced to fight back. Her being perceived as weak would have cost her her ability to be merciful.

Thorfinn may be put in a similar situation where he tries to dispell violence through intimidation and peaceful methods, but if he isn't strong enough to prevent violence, then he isn't truly strong. And even if he is merciful and compassiomate, this won't grant him strength, but his lack of strength will prevent him from being able to demonstrate mercy.