Mercy vs. Grace

So i'm sitting down with my nice pot of perculated coffee and God's word...and start pondering God's views of mercy. Now with the friends i have surrounded myself with Grace is a big and important topic. In a generation that is moving away from dominant condemnation to a world view of grace...is mercy not interchangeable with it? I have been reading the book of Matthew to freshen my perspective on what Jesus has to say because i can tend to get sucked into Pauline theology a bit much. Jesus says, "It is not the healthy who need a doctor, but the sick. But go and learn what this means: 'I desire mercy, not sacrifice.' For i have not come to call the righteous, but sinners." I wish i knew what that meant. I know that Jesus is alluding to his grace being dispersed to those who need AND want it, making a backwards comment towards the pharisees i suspect. Then i try to transpose that to Christians vs. non-christians today and i realize that many christians are still just as sick as non-christians...for we are never well it seems.

My view of this is that we are not to condemn as our own sacrifice. A few chapters later Christ again addresses the Pharisees about knowing the meaning of mercy over sacrifice when He and His disciples ate grain from the fields on the sabbath. So is the point learning how to be merciful to all people and show grace and mercy so that God may exercise his sacrifice to save their souls rather than us trying to do a good duty and separate the weeds from the grain ourselves and cause dissention between us and those we are trying to save? Is the point to let God be God and us try to be merciful as our God has demonstrated? Just a thought to ponder???