And yet that very set up is how ISIS and other terrorist organizations act. Each time someone is killed they play it up as if they were some great and noble sacrifice. Which helps them to inspire and recruit new people to their cause though propaganda.
Well then your options are simple:
-You neutralize an enemy combatant and the presumed leader of a massive terrorist plot, risking inspiring an unknown number of potential copycats through his martyrdom.
-You let him go, allowing him the opportunity to try again elsewhere.
Which would you consider to be the riskier option? Do you honestly believe that a terrorist that is trying to wipe out millions of people wouldn't be captured or killed regardless of a handful of civilians if there was a chance to stop him altogether? Is it likelier that he'll try again as opposed to doing nothing? Also consider that there's an even stronger argument for taking him in alive, since any intel you might be able to squeeze out of him could be exceptionally valuable. Sure that doesn't pan out if you do, but that doesn't matter in the moment.
Note that I'm actually caught between these two choices. I actually like how both stories play out. However, if I was being really serious about determining Balak's fate in the role of Shepard, he'd always either die or be detained. If you let him go, all you get are a handful of people who can't give you any more information about this crazy batarian. I think a drawback of the story is that Balak's shenanigans in ME3 is pretty much a quick errand run on terminals. There's practically no hubbub about it if you do nothing.