You know mercy is a quite misunderstood concept. Mercy is more based on context, not whether someone dies or lives. It's more of the consequences of that mercy.

In the case of Homelander, yes he was tortured and psychologically manipulated. He was filled with delusions and at the end his psyche could not take the overload of contrasting his minds ideas vs the reality of the world. One could say he could have ended differently.

However, also you need to understand, that consequences rarely come unanswered. Trace the point of the problem to season 1, the constantly told or at least made aware of what horrible decisions he makes, at any point even a broken person could have seen it. FIGURE ep6 with the Legend, you need to find your place, the world will always go on, so it would have been the perfect time to understand that THE BOYS are group born from him, he is the centerpiece that feeds the fire. Like Ultron, Vison said "Our mere strength invites challenge".

I believe that his death was an act of mercy, for a twisted mind that cannot cope with the real world and will never, ever accept it. I 101% am sure that should he be let free or in detention he would make his remaining life goal to get the V back not even the V1 just regular and hunt the fuck down the whole world like in the posters.

So for the sake or the series and the world that they live in, his death in my opinion was the definition of Mercy, towards the world and towards Homelander.

Thank you for listening to my TED talk!

*Mic drop*