DJ,
Your definition of tolerance seems a tad simplistic and reductionistic. Most people don't use the word that way. In my thinking (and I could be totally wrong), most people use the word tolerance to mean something akin to what Knight and others have suggested. Implied in tolerance, for most commonsensical folks, is the idea that there are certain limits, and for most, those limits begin when harm is being done.
Maybe this will simplify the issue (and by simplify, I mean complicate it completely)...did Jesus tolerate sin, or more rightly sinners, during his earthly ministry? The Pharisees sure thought so...
So, in what way is tolerance synonymous with mercy? How one answers that question will be helpful in solving this problem because I think we can agree that mercy triumphs over judgment (or so James thought).