still needs a hypergolic-fueled thruster system. You'd still need a hypergolic system to do things like unload momentum control wheels and perform maneuvers requiring more thrust than the ion engine can handle.

Remember, the DS-1 mission ended because it ran out of hydrazine propellant. It only carried 31.1 KG of hydrazine at launch, a tiny fraction of the amount it would've needed using conventional propulsion. That amount of hydrazine would've only been enough to impart a delta-v of perhaps 100-200 meters/sec or so. Had the 81.5 KG of xenon been hydrazine, it would've only been sufficient for a delta-v of perhaps 400-500 meters/sec. By comparison, the DS-1 ion engine imparted a delta-v of about 4.5 KM/sec over the mission life, 10 times the propulsive efficiency of chemical propellants.

For a Mercury mission, ion propulsion could possibly shorten mission time considerably. However, the problem of orbital insertion remains, like you pointed out.