I thought he said Morgan couldn't do it (kill him), and that he should have.
Yeah, that was my take. Both the guys that recognized Morgan (First in the group fight, then the ambush guy in the home) were from last season, right? Weren't they the hiker guys that had Morgan trapped, but he fought them off and stashed them alive in a car? I think this episode was all about Morgan getting to the realization that Rick is right about not letting dangerous people live. Morgan is pro life and Rick is Pro Choice.

The Ambush guy figured out that Morgan could have killed him a couple of times, but couldn't, and this guy was just going to keep coming. By the end I think Morgan has come to the realization that he is going to have to kill the living, but is pretty unhappy with that realization. I also think that him letting the group fight guy survive and run off with a gun is going to come back to haunt him.
That episode was awesome. Huge crazy fight out of knowhere. I like the horn reveal - not intentional, but not some silly accident either. Carol is awesome/psychotic. Awesome quick thinking to disguise herself as one of them and then start taking them out one by one. I loved seeing more of Morgan's stick fighting as well. A second week with someone asking who trained him? That's got to be leading to someone. I like how they are introducing new characters like the doctor slowly and not making the whole episode about them, though I wish the doctor had been able to save Holly. Both have bigger storylines in the comics.
As for the wolves, what is up with these guys? Definitely a bunch of nutbags as they keep hacking away at people after they're dead. It's a weird dynamic that they're crazy and yet seemingly well organized to take Alexandria. And one of the guys referenced that they had no choice, but to attack? I wonder if the same pyscho from the comics ends up being the baddie in charge of these guys. They sure seem a lot more like the Scavengers from the comics based on the attack. And did it seem to anyone else like Enid was in on all this? I wonder if she was sneaking out to pass along information to the Wolves, and she clearly seemed prepared to leave at a convenient time. JSS indeed. Can't wait for the next episode!