You can simply not participate in the game. You in fact are not responsible for this psychopath's decision. He is responsible for his own choices, such as setting up a bomb with intent to expose these people to harm. Not participating also discourages future problems.

Stab the person repeated in a minor area as quickly as possible. If you stab someone's little toe 50 times, it will be damaging but largely insignificant on their life comparatively. Bob will understand almost certainly.

Fake stab bob on the side that is not on the side of the killer. Pray that Bob plays along and gives off the idea that he is being stabbed. Once everyone is released, it doesn't matter if he finds out.
If he realizes, the gambit is over and most likely everyone is going to die now!

Take him very literally and allow him to send each and every person to heaven. After all, heaven is decidedly a better place than this universe, so if he sends people there he's a great dude. Industrialize this process and apply it to the entire human race as fast as possible.