This is... extremely not a bug?
Moving to... General, I guess!
The behavior is that it will:
1) Use the Harpoons when seriously pressured (i.e. high flux, taking damage, etc), and
2) Otherwise save them for more ideal situations
After all, in a fleet setting, chances are the Hound will get cleaned up by another ship, and the Harpoons are probably better spent on a higher-value target. And even firing off 3 full racks at a Hound
might not kill it, and then where will the Mercury be?
If this happens to be a problem when you field an entire fleet full of Mercury-class shuttles, well. That's what you call one of them edge cases. Basically, what you're observing is the fix for "ships immediately dump most of their missiles at a few unshielded targets at the start of combat" issue