We have a situation in our game where my merc T'ugar is part of invasion combat, but my DN wiped the defending GF out before he arrived.
Does this scenario result in him getting to use his merc abilityto look at the opponent's hand of AC at the start of a battle and choose 1 to discard?
Yes. You committed to the invasion; just because there are no defenders left standing (because they were bombarded into oblivion), doesn't mean there is no "battle" anymore.
It's just an awfully short battle, with very little rolling. But there is still a battle, still an "at the beginning of a battle" step.
Likewise, you would drawn an AC with Felrey if she landed, even if there's no one left to fight.