George fully intends to shoot Lennie when he meets up with him at the campsite by the river. This is shown by the fact that he has brought Carlson's Luger with him. But he feels compassion for Lennie when the time comes for him to do the actual murder. Steinbeck shows this in what George says and does.
George took off his hat. He said shakily, "Take off your hat, Lennie. The air feels fine."
George's voice is shaky, betraying his feelings. He takes off his own hat to give him an excuse for suggesting that Lennie take off his.
With the men from the lynch mob closing in, George is forced to act, but he is extremely reluctant to do so. This is partly because Lennie is so trusting and so loyal. The two men have been together for a long time, and they have been through a lot together.
George raised the gun and his hand shook, and he dropped his hand to the ground again.
Steinbeck says nothing specific about George's feelings. The reader has to interpret his feelings from what he says and does. Responding to Lennie's request, George repeats some of his story about the little place they are going to have someday. His voice breaks as he says:
"We'll have a cow . . . an' we'll have maybe a pig an' chickens . . . an' down the flat we'll have a . . . little piece alfalfa--"
This is especially touching because the reader realizes that there is no possibility of Lennie's dream ever coming true. If George doesn't shoot him--and doesn't do it quickly--the mob of enraged men will be on them any minute and will finish Lennie off in a far more gruesome manner.
George feels mostly pity for Lennie. He seems to think that some last words would be appropriate.
"Ever'body gonna be nice to you. Ain't gonna be no more trouble. Nobody gonna hurt nobody nor steal from 'em."
What makes it especially hard for George to pull the trigger is that Lennie is so trusting and so devoted to him. Lennie, in fact, is the only friend George has in the world, and probably the only friend he ever had. When he kills Lennie, he knows he will be all alone in the world, like the other men, and may be alone for the rest of his life. This is the point where he realizes how much he values Lennie's friendship, even though Lennie has been a burden and a source of trouble and worry. The reader is made to feel compassion for both of these insignificant men--which is exactly the effect Steinbeck intended.
Steinbeck wrote this novella with the intention of adapting it into a stage play (see eNotes "Introduction"). Everything in the book can easily be transposed into a script, because there is hardly any prose exposition. In this last scene the reader sees what the two men are doing and hears what they are saying. What they are feeling can easily be deduced from their actions and dialogue.
George is not especially concerned about being charged with murder. He doesn't have an alibi, but Carlson hands him a convenient one.
"Did he have my gun?"
"Yeah. He had your gun."
"An' you got it away from him and you took it an' you killed him?"
"Yeah. Tha's how."
Nobody is going to take any trouble investigating the death of a bindlestiff like Lennie Small.
George decides to shoot Lennie after he has accidentally strangled and killed Curly's wife. He knows that Lennie will be be lynched if found or would never be able to continue living a normal life if he attempted to escape and hide. The end of Lennie's life was inevitable. Rather than allow Lennie's experience of life to end painfully and horrifically among those who did not love or care for him, George decides to shoot Lennie himself. He has Lennie happily and peacefully think of their dream for a final time before placing the gun at the base of his neck and pulling the trigger. He allows Lennie to die content and quietly rather than in a violent and horrific hanging.