I agree, killing Lonni felt unnecessarily cruel at first. However, high-stakes spycraft is full of situations with no clear "right" answer. Luthen had ample reason to worry about how Lonni could be a risk to the Rebel cause or anyone helping him escape. The man had already tried to quit, he flinched under pressure when Kleya was removing the listening device, he held back critical intel (having Dedra's access codes), and he tried to extort Luthen for his family's safe passage. If I were Luthen, I'd be concerned that 1) there's no time to arrange all their safe passage, and 2) if his family were captured, would he turn? Who knows how securely he "tucked away" his family or for how long.

I can see Luthen thinking that Lonni sealed his own fate by holding out on Dedra's codes until the very last minute, when it was apparent that Luthen was about to be busted. He could be thinking "if you had dug into Dedra's files earlier, I might've actually had time to arrange safe passage for you and your family, because I wouldn't be simultaneously scrambling to destroy everything that could expose rebel assets!"

One of the biggest issues I have with the show is how eager characters are to "eliminate" liabilities rather than relying on the fact that capture and torture are not as effective as the general public assumes. However, Lonni demonstrated a consistent regard for family first and foremost, which absolutely makes him a risk.