While don’t know exactly what Merlin’s agenda is, I think he can be trusted. If he said not to pull out the sword or else bad things would happen, then Emma probably would’ve been better off leaving it alone.
I agree with you that he can be trusted in principle, but I think Merlin is more of a “big picture” kind of guy. Bad things can happen, yes, but since he is someone who presumably can see the future, one could speculate that he can see the chain of events that will lead to a particular result — the morality and/or nature of the concrete steps that lead there would be less relevant to him than the bottom line. Doesn’t his dialogue say something like “when you do something you’re not supposed to do, even for the right reasons, bad things happen”? In context, it seems to be about the sword. But it tells us nothing about what the sword is, or why it leads to bad consequences.
I am assuming the bad consequence is that it’ll somehow release all previous Dark Ones and other assorted baddies into SB — it’ll literally bust open the gates of hell. Considering SB these days, I’m not sure that the villains’ new place of residence will be that much of an improvement. How the show will tie this back to Camelot, I have zero clue.