Guy gets fired, goes nuts and start killing corrupt cop's family? bad guy.
Cops freak out, start shooting any anything that moves? bad guys.
I say rein them all in.
The guy is off his rocker and even if he is more rational then a psychopath, he is still not right in the head and needs to be stopped. While I can sympathize with his plight in wanting to stop corruption and wanting to clean up the force, the methods used can not be condoned and his actions and words reveal e needs to be stopped.
The police reveal a fear and paranoia that is inexcusable, made all them ore suspicious as it comes directed towards a guy calling them out for corruption. The instant reliance of lethal force before even identification could be made shows a value on killing him over anything else and can easily lead to the belief that they have something more to hide or they know they have far less actual power to stop him then they let on. Either way, I would highly recommend tearing apart and examining the administration, the corruption claims and the management.
Or to put it simply here, both are wrong, both need to be taken care of and even if one may be "worse" then the other, doesn't mean they should be exclusively chosen.