Does God show mercy to everyone, or only to those who qualify?

I think I have mentioned that one of the things that I have been studying is the tension between God: Merciful and Just; the benefits that the Bible tells us to expect from following Jesus/God; and the Saintly Poor who many in Christianity today seem to think deserve all of the benefits of accepting Jesus and following God, without actually having to do so.   

Now Scripture tells us that God will have mercy on whomever He choses to have mercy on.  However if God just starts handing out mercy to everyone, willy nilly; doesn't that make a mockery of justice?

That is why I found this verse interesting.

Luke 1:50(NKJV)

50    And His mercy is on those who fear Him     From generation to generation.

Now I'm not suggesting that this is the complete answer.  I will continue to look for other Scripture on the subject, but this verse seems to indicate that God does have a general standard on who deserves His mercy. 

It seems to be saying that God reserves His mercy for those who fear Him.  In this context I believe fear Him refers to those who love Him, respect Him, and follow Him; not those who fear Him in the sense that God will hammer them if they don't believe. 

Make sense?   

It'll be interesting to see what other Scriptures I find to help explain this tension.