Why does Mercutio say, "Oh calm, dishonorable, vile submission"?

Mercutio says this in act III, scene I, during the conflict between the Capulets and the Montagues in the public square. Tybalt has just challenged Romeo to "turn and draw," having addressed him rudely and contemptuously as "boy," and rejects Romeo's attempts to calm Tybalt with his cryptic allusion to "the reason that I [Romeo] have to love thee." Tybalt does not understand that Romeo is attempting to calm the situation because he now has divided loyalties due to his love for Juliet and his disinclination to hurt a member of her family.
Mercutio, likewise, does not understand this. As far as he can see, Romeo is exhibiting a "vile submission" which is not fitting to a member of his house and indeed bringing shame upon his family by failing to respond appropriately to Tybalt's challenge. Mercutio may fear that this makes Romeo look weak or, indeed, submissive and "dishonorable" for having failed to rise to a direct provocation from Tybalt. As such, Mercutio attempts to correct Romeo's inaction by drawing his own sword and challenging Tybalt himself, thus indirectly defending the honor of the Montague house (which Romeo has put in jeopardy by his attempts to deflect Tybalt's attacks).