No of course superior hp doesn't make a Mercedes. A Mercedes isn't even usually the most powerful car in a given class, its a hit or miss affair. As others have pointed out, the AMG cars usually outpower everything, but not the regular models. For the moment the S550 outpowers the class as does the S600 (don't expect anyone to topple the 600 though). The E550 outpowers the class. So when it comes to V8 and V12 cars this may be true, now....this wasn't the case just last year.
Now with the 6-cylinder cars Mercedes is merely competitive in most cases and behind in some. The C350 doesn't come close to the new 335i. The E350 does outpower the 530i/A6 3.2, but that will soon change when the 535i comes back (loved that designation on the early 90's 5er).
So really Mercedes true hp advantage rests at the top of their range which is where they're more successful compared to BMW and vice versa.
So no HP doesn't not make a Benz, but it is now an intergral part of of the lure for the V8, V12, AMG cars.
M