Creon grants one of Medea's requests. How merciful is he being at this point?

By recognizing Medea's vulnerability and acknowledging her desperate situation, Creon is showing a slight degree of compassion. In all honesty, he is her father, and this slight degree of compassion is almost laughable. Creon, though suspicious of Medea's plans, doesn't want to put his daughter's life in danger, but he also refuses to jeopordize his kingdom.