It's funny that a story presented by a character as an example of something he deeply regrets is being argued about. I mean, Blackwall himself admits that this was a sh*tty thing he did, and that people should be better than this.
Yeah, we've only had this same "discussion" with Hanako about the dog story a hundred million times in the Blackwall thread (I use the term "discussion" very, very loosely). That was when Hanako basically insinuated that everyone who didn't condemn him over his actions - when he was a child - was okay with animal cruelty. All we did was try to point out his relatively young age and to talk about why a child (or even an adult) might not intercede in a similar situation.
Rainier could have stepped in and clearly does hold this as another thing in life that he regrets. As to the issue of why he didn't step in or get help? He doesn't ever explain why, but I think it's safe to say that he was certainly outnumbered by the gang of urchins who did it, so stepping in wasn't going to be a realistic or smart option (believe that Hanako insisted that he should have just thrown himself at the gang of urchins early on in the "discussion" - which goes toward showing the kind of "logic" involved at that point).
Rainier may be viewing this with the hindsight of an adult and may be assigning more blame to himself than he should be over this incident. He might simply have been afraid and panicky at the time (he was a kid, after all). We don't know and will never know his actual mental or emotional state at the time, but he certainly wasn't the one who strung up that dog.
He does say that he could have told his father, but we are left to speculate about why he didn't go to him. For all anyone knows, he could have been afraid of losing his beloved father after his younger sister Liddy died. Maybe that death made him fearful of losing someone else that he loved. Or his father could have been a real bastard and his home life sucked so horribly that his father was the last person he'd ever go to for help.
Aside from his younger sister's sudden death (he seems to have loved her very much) and the fact that he's from Markham, no one really knows anything about what his life was like back then (or what he was like back then) at all. Either of the two scenarios that I suggested above could just as easily be possible as not. My point is that no one can begin to guess at what may have influenced his decision on that day.
How is anyone supposed to even begin to judge a kid over something like that? He clearly does blame himself now that he's an adult for closing his eyes to what happened. But blaming yourself over things that you did/didn't do when you were much younger and having regrets over what you did/didn't do seems to be something that every person is going to end up going through in their life (unless you've had some sort of perfect life and somehow managed to unfailingly make the right decisions every single day of your life, etc.).