No, I don't think that Death is conflating them at all. He is saying that Mercy, Justice and the like are human constructs and are not an inherent part of the universe. In this he is completely correct.

Where he goes wrong is in having only two categories "Truth" which seems to include only that which is inherent to the universe and "Lies" which he uses to hold everything else. There is no room in this philosophy for conjecture, goals, hopes, dreams, and the like.

Sadly, I have met folks who, while perhaps not as extreme in their classifications as this, nevertheless have no place in their personal philosophies for unproven conjectures, potentially true statements, partially supported beliefs, and the like. They are not comfortable with areas of gray between what they know is true and what they know is false.

I think the statements of Death are couched to appeal more to their philosophy than ours, but perhaps that is because Pratchett thinks such people more in need of the instruction.