To use you as a meat shield for the first arrow. As Karliah says, fighting Mercer would have been a death sentence for her. All Mercer wanted was the for the PC to get hit and then die, which was a reasonable assumption seeing as Karliah is a master marksman.
Your character had no idea about Mercer being evil, exactly. But he is your leader. So what exactly are you complaining about? If you don't like the options he gives, you don't have to do the quest. No one is forcing you to accompany him into a death trap.
I finished that part last night and I have to say I didn't really mind the linearity that it forced on you there although I did feel like I was pointlessly there when I would be sneaking along, fire a single arrow into a Draugr and he'd just scream something, charge in, wipe out an entire room while i'm still coming round the corner sneaking only to find everything dead and him standing there shrugging his shoulders saying something about it not being a fight, but an execution. I just kept telling myself that I was moral support, standing by the sidelines cheering although I did think something was up when he said "you lead", him being the leader of the Thieves Guild and all.
I quite enjoyed that quest line to be honest and the linearity is needed in a way because otherwise you're just going to end up running in circles really not knowing what you're supposed to be doing, gamers can be stupid at times and some need guidance, for me, it didn't detract at all, although killing Mercer was a little bit disappointing because he just kept turning invisible and running away each time I shouted at him and shot him while he was on the floor.
The major thing I don't quite understand with the game is that everyone is supposed to be religious and have some sort of afterlife, originally I was going to the Nordic place (Svar something), then I became a werewolf and i'm hunting with some guy, now i've sold my soul to serve something in life and death, therefore does that make me imortal because there will be some lawsuit over where I will spend my afterlife..?