I wouldn't call Merle a coward. He did serve in the military prior to the plaque.
History has shown that simply having a military record does not automatically absolve one from rightly being called "coward" (among other things) upon committing heinous acts. Although Merle has sided with his brother's group for now, he has his own history of atrocities. It should only be a matter of time before Merle's true nature resurfaces and he'll have to be put down like a rabid dog.