That's exactly how I felt and it goes a long way to explaining why they seemed to model her so much on Lex to begin with: if she's actually Mercy Graves, then it makes sense that Lex showed her everything he knows and she's carrying that banner loud and proud now that he's gone.

Yes. This is a great development.

To bring it all around to SV, I suspect that SV!Mercy's loyalty to Lex comes from some sort of similar dynamic -- he saw something in her worth nurturing (by values of "nurturing" which really mean "indoctrinating in the Luthorian way of handling your business") and pulled her out of some kind of tailspin she hated. Certainly, the show seemed to be suggesting that her younger self was socially conscious and kind of bleeding heart (saving marine life, protesting and all that) and the implication is that her life experiences since being on that island have somehow corrupted those impulses to the point that she mocks them when Lois displays them.

What was intriguing to me was the suggestion that the corruption of her impulses is due not only to her kidnapping and the murder of her friends, but also due to some unnamed betrayal by Oliver. I know in comics canon he's kind of a jerk and a womanizer, so I'm wondering if they're deliberately going down that road with him this season.