True, but mercury does not dissolve the iron of the lock. For that, the sulfuric acid is necessary.

If grog would contain both mercury and acid, they would not mix, but there will be a mercury layer at the bottom and the acid solution would stay at the top. So the mercury could dissolve the bottom of the mug, while pouring some acid from the top could dissolve the iron lock.

The fact that iron is among the few metals which are not dissolved by mercury had been widely used in the past, when the use of mercury was less restricted. For example, ignitrons and mercury arc rectifiers, which were used in high power converters before the invention of thyristors, contained a pool of liquid mercury, so for them iron vessels were preferred instead of fragile glass vessels, like those used in smaller vacuum tubes.

In the Roman and Greek Antiquity, the most important use of mercury was for the dissolution of gold and silver, which was used for their purification and in the fabrication of jewelry.