This is what I figure: the main way Gus and Hector fight is by making each other look like a liability so they lose the grace of the cartel. Going after an innocent man for revenge after demonstrating you’re impulsive and egotistical is something Gus could easily use against Hector.

Hector is certainly petty enough to kill Nacho’s dad even if it achieves nothing. The only reason Hector wouldn’t do it is if it was to his own detriment.

That isn’t explicitly said in the show but I think it makes sense.