Why Did Merle Let Michonne Go?

He let Michonne go back because he knew she could help his brother, not because he was a big angel. He also let her go because he knew that trading her to the Governor probably wasn't going to have a good outcome.

Is Merle a good guy?

Merle was a terrible guy. ... With the death of Merle, The Walking Dead loses its most compelling character. Merle was a racist, misogynist, bigoted, Garguilo-killing redneck, but, as a man with both good and evil in him, he was also one of the most interesting characters on the show.

What does Merle do with Michonne?

After their conversation, Merle frees Michonne and takes off in a bid to kill the Governor himself. When Daryl finds Michonne on her way back to the prison, he takes off after his brother — instructing Michonne not to let anyone come after him.