It seemed kind of hard NOT to kill him. I mean I found it kind of difficult to convince him to stand down and I think it was meant for us to kill that ghoulish bastard. It's not like he was a nice guy...
You had to respond in a "nice" manner in dialogue options.
Wiki says ■His ego is very fragile, and the player is encouraged to take care not to bruise it when dealing with Domino, lest it carry dire consequences down the line.