I returned from visiting Caesar and immediately wasted Cottonwood Cove via radioactive barrels and headshots, then I went off and liberated Nelson and I noticed that not all the Legion were hostile there. I returned to the fort and no one was hostile so I wasted everyone, including Caesar and my reputation was still only "Merciful Thug", surely I should be vilified by now.

I haven't yet done any MQ objectives that would annoy the Legion, is this the only way to generate some real hate?

If you have any fame from any rep gain task (including turning in NCR dog tags to the legion) You rep with them when you did the barrel thing would be Merciful Thug.

Just go waste all the legion. It is more fun that way.

It really doesn't matter what you do if you have already gotten a good reputation with the NCR or the Legion. Kill 'em all, and you will still be a "merciful thug" as far as my experience shows. The only way to be vilified is to start out by getting a vilified reputation. As a merciful thug, ordinary troops (both NCR or Legion) will not attack you, and you can still interact with them. Even vilified, I think it's only the assassins that attack you on sight. I nuked both the NCR and the Legion and the reaction was then "Most people think you're the devil himself, but you sometimes do good things"

The only troopers who attacked on sight were the troopers I had turned into ghouls...