I think this all comes down to better training on how to deal with volatile situations. Shooting a suspect who is threatening police officers, or others, is one solution to the problem, but it is not the only solution.
Yes, the person who threatens a police officer put his/her own life at risk - and they should accept that death may be a consequence of those actions - assuming they understand those consequences. But, as a society, it seems we should value all lives, and work towards how best to preserve them.
The other factor here, that I think favors the officers (at least because they don't have better training), is that they have to make a very quick decision. This guy, while probably not a real threat to anyone, could easily have gone back towards the people who had gathered, making it more difficult for the police officers to contain the situation, or even fire in that direction if necessary.
Bottom line, we should be providing our police officers with fewer tactical assault weapons, and COD-type training, and more incapacitation-type weapons, and training on how to defuse volatile situations - or contain them until help arrives.