I really was going to write this earlier I swear. Spoilers.
The story starts with narration from an unknown woman talking about how the town of Mercy has a protector who is very old. I like that they framed it this way. There are episodes where you don't always know if the Doctor will get out of a scrape, and given how intense things got for him it was nice to know that the ending would ultimately work out in some way. We also see a cyborg man killing someone, saying he only has one person left, the Doctor.
I also liked that we don't get any explanation of what was happening when the Doctor picked up the Ponds, for all we know they've been traveling with him for the past week or month. The Doctor's opinion of the keep out sign was also great, "I view it as a suggestion, like dry-clean only". There's actually a book written about this concept. You can get it here.
Anyway, the Doctor and the Ponds enter the town of Mercy, population 81. They very quickly notice that the town has electric lights 10 years early (the Doctor-Rory exchange about that was great) and that the towns people are staring at the Doctor. When they learn he's an alien Doctor they kick him out of town. But the sheriff(marshal?) saves him! We learn that a proper medical Doctor who is also an alien came to the town some time ago and started helping the residents, hooking up electricity powered by his damaged ship. This is about when I made my prediction that Kaler-Jex (the doctor) would not be alive when the episode ended. We also learn that no one can leave town, or enter with supplies because of the Gunslinger (the cyborg guy from the start).
Doctor decides to save everyone. Rory and the Marshal (sheriff?) run off as a distraction while the Doctor rides off on a horse called Susan (of course he speaks horse). The Doctor plans on getting the TARDIS and rescuing everybody but he stops by Kaler-Jex' ship first. After threatening the blow him up the ship reveals a terrible truth...Kaler-Jex built the Gunslinger during the war! What war? An alien war! Just as we're realizing how evil this guy is, he has a nice moment with Amy where he deduces she's a mom just by looking at her eyes (how sad is it that Amy seemed to take a moment to think about it before answering yes). We also learn that the Gunslinger isn't really a bad guy. He won't hurt innocents, and made the boundary around the town to protect them. He just wants revenge on the man who hurt him and made him what he is.
The Doctor gets mad so he grabs Jex, forces him out of town, and holds a gun on him. The Doctor's actions here scared me. Amy manages to talk him down, reminding him that they have to be better. Part of me hoped he would confess to killing Filch but that didn't happen. Jex asserts that he's no longer a bad guy. The Gunslinger thinks that's a load of phooey, and fires, but the Sheriff (marshal?) pushes Jex out of the way and gets hit. He gives the Marshal (sheriff?) badge to the Doctor. At this point I honestly thought that when everything was done, the Doctor would send Amy and Rory home, then stay in Mercy as it's protector for a while, both as punishment, and to reconnect with humanity.
Gunslinger says he'll be back at noon. That night the towns people try to get the Doctor to hand over Jex, but he refuses. The Doctor talks to Jex who (quite rightfully) points out that the Doctor isn't much better than him. The Doctor calls Jex out for using the Town as his penance of choice but that you don't get to decide your own punishment. Between this, and the fact that Jex's ship isn't really damaged the Doctor gets an idea for a plan.
The Doctor distracts the Gunslinger using the sonic screwdriver, and people running around with similar markings to Jex. Meanwhile, Jex runs to his ship so he can go home and be judged by his people. Instead, feeling guilty, Jex blows himself up in the ship. And thus my prediction was proved correct.
Like Inigo Montoya, the Gunslinger doesn't really know what to do now that he has his revenge. Like Wesley, the Doctor suggests taking over his job. We learn from the voice from the beginning that the Gunslinger stayed in Mercy as protector, wearing the Sheriff (marshal?) badge.
In slightly sadder news, Amy and Rory (after pointing out that the Doctor needs people) turn down his offer for another trip because, "our friends will notice we're aging faster than they are." To be fair I did wonder how Martha explained aging several months in a few days to her family.