I was completely shocked and sickened. . . but I spared him. I'm certainly not about to say that he doesn't
deserve to die, but in the end I let him live. My Hawke was pro-mage in general but definitely did not condone blowing up the Chantry. On the one hand, what he did deserves execution, and he knows that, but on the other hand. . .
a) It kind of seems like an easy way out for him. If he dies, he doesn't have to deal with the consequences of what he's done.

My Hawke believed that there was still good in him, and couldn't stand to kill him if she were correct about that. After fleeing Kirkwall, she'd make it a priority to see if she could dig up a way to separate Anders and Vengeance, and give them both a chance to do better.
c) After seeing everything go to hell in Act III, culminating in Anders/Vengeance blowing up the Chantry. . . she was just damned
sick to death of Vengeance. The spirit and the concept generally. To kill Anders for what he did would be exacting vengeance. And she felt that the best way to give him a metaphorical slap in the face was to refuse to play his game. Vengeance, meet Mercy.
I felt that Merrill expressed what I was thinking: "He should come with us. Do what he can to put things right."
Does he deserve another chance? No, not really. But that's often what mercy's about. My Hawke was sick of bloodshed by that point and wasn't going to shed any more than she had to.
Sebastian's reaction saddened her, but it made total sense for his character. She'd seen him pursue revenge before, and the person who had done the most to steer him away from that path had just died horribly. She couldn't blame him for storming off, but I wish the dialogue had given me a better option to express my character's reasoning for sparing Anders (not that I think it would have changed Sebastian's mind. . . sometimes I just wish my characters could express themselves better). That said, I also wanted an option to spare Anders but still hit him hard several times. As in, backhand across the face. And with Gloves of the Champion on, that oughta hurt.
I realize none of these reasons are entirely rational (if at all). Killing him is probably the more rational choice, as it safely eliminates the possibility of him doing such a thing ever again. But I imagine my Hawke keeping a 24-hour watch on him henceforth. Hard to do, but she'd be very serious about taking responsibility for him.
In short:
Goddamnit, Anders, you are going to atone for what you've done.