Under grace or under law

I was thinking the other day about being under grace and under law. Have you ever heard people say to Christians that you should forgive rather than punish because we are not under the law but under grace. The whole are is quite misused and mis-quoted by people.
1 Peter 2 tells us to submit ourselves to the authorities since they are delegated by God. We can therefore deduce that we come under the law of the land (whatever that is), so for instance, if we were caught speeding, we wouldn't be able to say that we shouldn't be punished because we are under grace not law!
We should really understand that law and grace for the Christian are related to our relationship with God rather than men. At work, our immediate boss might say that we are not allowed to take time off according to the rules whereas our managing director might allow us to because they are in charge of the rules. In the same way, God knows that we might be punished for breaking an incorrect human law even though with regard to our position before him, we might stand as a justified or innocent person.
So what impact should it have on our lives and our dealing with others? Personally if someone says they live under grace, i would expect them to be gracious. If they are not gracious then they prove that they do actually live under the law and should be treated as anybody else. Of course, in our times, some people want to treat others legalistically, with pride and arrogance, while being treated themselves graciously with forgiveness and humility!! Typical!