Killing Karlach is only available if you choose to take the crown, the evil choice. Pretty brutal scene of you stabbing her to death. It doesn't appear motivated by mercy more to gain the stone to control the crown to rule the world.
OK, I see. For a second I thought I'd be like the Mind Flayer Orpheus death scene. But it's completely different, good.
Well, I mean, I was referring to beign an act of mercy because ending up as a Mind Flayer is like a bad end for me. :p
But that's not necessarily the case, specially because our Mind flayer transformation remember who he/she was before beign transformed.