My class discussed this, and we came to the conclusion that yes, Mercutio was blatantly flirting with Romeo!
There's the legendary first tete-a-tete between them, and then the whole duel where Mercutio dies?
Completely unneceassry, he only did it out of some deep love for Romeo.
I guess it depends on how you interpret what Mercutio says. In Act 1, Scene 4, Mercutio's teasing could be seen as flirtatious and there is a lot of sexual emphasis on what he says. You could take it as homoerotic, or it could be interpreted as banter between young lads. I would say that there's an argument either way.