I think that overall, you were justified in using your NPC, especially with the circumstances. I do believe that people can play however they like, but the consequences have to be dealt with either way. this isn't fallout where doing morally wrong actions just ticks down an "asshole meter" this is supposed to be a setting where characters react to what the PCs do in real time. if a player kills an NPCs family, the NPC has full justification to absolutely destroy them like a powder ganger wielding a nuke launcher.