It was a pragmatic choice, not a bad one. Yes, you did get him and put a stop to his current and future genocide plans. At the price of a few hostages and your conscience.
If you let him go, you save the hostages, but let him go free. He might commit other crimes someday. He might get killed in a bar fight 2 days later. You saved the hostages (and proved weak willed) but he remains at large. Bio could set up a scenario where he causes some other deaths, but wouldn't that just judge your earlier decision of letting him live as the wrong one? (Well it is anyway, but keeping things uncertain is better IMO.) I thought the point is to give you a decision, not a 3 year long puzzle?
It's better to just report a random batarian attack on a human installation/city and let the player worry if it was four-eyes or not.
I said bystander casualties, not hostages and accounted for both possibilities.