In examining the story unfolding here in 1Samuel 6, Robert Alter points out that there is indication of a possible mistranslation. The Philistines make an offering to the God of Israel in the form of "Five golden emerods, and five golden mice". This is the first time we hear about mice, and it's suggestive to some scholars that there is an aspect of the affliction of the Philistines about which we're not being explicitly told. Think about it: hemorrhoids are bad, but they aren't generally fatal. It may be that rather than being hemorrhoids, it was the dark boils associated with the Bubonic Plague that we're really talking about (which often appear in the groin area), a plague also associated with rodent infestations. It seems like a resonable speculation, although admittedly, golden images of their "buboes" still seems silly.
This offering of "Five golden emerods, and five golden mice" is at no point in the passage indicated to be demanded by God, only that the Philistine priests thought it was the best course of action, along with the rest of what is done in this chapter. (The issues of the number of gods and who it is that hardens hearts are ones I have previously addressed.) They put the ark onto a cart and return it to the Israelites, taking the manner in which the ark returned as a sign, which, lacking any evidence for or against God agreeing with this method of divination, you can take as you will. The actions of the cows is unusual, so it may be taken as miraculous, but it's not such an exciting miracle if so.
The final tale of this chapter is that of the men of Bethshemesh, many of whom died because they looked into the ark. Apparently, this was not a right thing to do. (It may have been reserved for Levites only to look, or it might possibly have been for no man to see the contents of the ark, I don't know; no doubt Stephen Spielberg has some thoughts on the matter.) In all of the nation of Israel's dealings with the ark, once again, the issue is their failure to take the Holy things of God seriously. Clearly, God takes the ark very seriously.
Is God merciful? You just know I'm going to give the answer "Yes" but how does one deal with the details the SAB brings up, which are certainly confusing? One thing worth noting first of all is that the first verse given in both columns is from the very same chapter. When you get an apparent contradiction that follows so quickly on itself, you're probably misreading or misunderstanding. God is merciful, yes, but His mercy is not without limit. To some extent, this is simply logical; there are cases where two parties are in conflict, and to give mercy to one would logically deny mercy to the other. Also, there's a very strange quality to mercy that I feel I understand conceptually, but may not be able to put into words well. Mercy is of a certain nature that it lives in contrast to justice. It's been said that justice is getting what you deserve; grace is getting something good you don't deserve; mercy is not getting the punishment you do deserve. If justice is never served, then in some sense, it cheapens mercy, and stretches the limits of some sort of cosmic balance sheet, it seems. God is merciful, but we can't escape punishment forever if we keep on pushing it.