Aaahh... I knew there was a reason I thought he didn't knowingly kill children. I never romanced him and have only done one play through so far so the details were fuzzy.
If you go through all his dialogue options when you go to talk to him in prison, he gives you the whole story. He was hired by some noble to kill a rival in the Game. Rainier found out that the noble was traveling somewhere with some of his men. The family was not supposed to be with him, so Rainier ordered his men, under false pretense, to kill the noble and everyone with him. His men blindly followed the order (which, honestly, says something about his men) and killed everyone, including the wife and kids that weren't supposed to be there. It was the death of the kids, in particular, that really tore him up.
When he met Warden Blackwall, he was forgiven for all his past crimes and told he could become a better man in service to the Wardens. He looked at that as a way to start over and be a better person. When Warden Blackwall was killed, however, he lost his chance to become a Warden because he couldn't simply wander up to the Wardens and claim, with no proof, to be a recruit. Or at least he saw it that way. So he became a Warden in the only way he knew how. He became Warden Blackwall because he didn't want the world to lose a good man. Everything he did was an attempt to atone for his wrongs, and though he was cowardly in a lot of ways, I never felt like he was a cold hearted man who killed for money.
In the context of the Game, killing just that noble would have still been a crime, but it was in bounds, if you will. Killing the wife and kids was beyond what was okay in the Game.
It makes me wonder, though, that NONE of his men stopped and said "hey, there's kids here. Do you think he meant us to kill kids?" They blindly followed orders to murder children. They're not entirely innocent, either. They could have let the kids live. So I don't feel quite as sorry for his poor, lied to men as some folks do.