Is this connected to the previous verse?
Radak: Yes. They will discuss His good and Tzedakah, which stem from His Midos of Chanun and Rachum.
Why does it say "Chanun v'Rachum"?
Sifri (Devarim 49): "Kol Asher Yikra b'Shem Hashem Yimalet" (Yo'el 3:5). How can someone be called on Hashem's name?! Just like He is called Rachum, you should be Rachum; just like He is called Chanun, also you should be Chanun. 1
Radak: Chanun having grace on the creations, and giving to them their needs. Rachum is having mercy on them, and guarding them from damage and worldly mishaps.
Malbim: All His acts are amidst grace and mercy.
Lev Eliyahu (Shemos p.75): It does not say 'just like He has mercy, you should have mercy' - rather, just like He is Rachum and Chanun without limit, so you should be Rachum and Chanun without limit, i.e. as much as you can be. This is the difference between doing Chesed and loving Chesed.
What is "Erech Apayim"?
Radak, Malbim: Also when He punishes, He delays His anger at Resha'im, and does not punish immediately.
What is "u'Gdal Chased"?
Radak: There is a Kamatz Chataf under the Dalet in u'Gdal. He increases His Chesed on people more than they deserve to receive.
Seforno: He increases Chesed - "Notzer Chesed la'Alafim" (Shemos 34:7).
Malbim: He shows great Chesed if they repent.
