Note: I'm not defending the use of lethal force in this case, I'm really fucking uncomfortable with that as well. Whether they could keep him bottled up until he gave out is a good question and not one that I can answer.
However, if this is a bomb disposal robot, it is likely that the explosive that the police put onto the robot is one that it is designed to carry and initiate. One way bomb squads dispose of suspected bombs is to detonate them at a time of their choosing using a charge placed by the bomb squad robot. I don't know, but think it's pretty likely that the bomb squad robot doesn't have a general purpose 'pull pin on grenade' option to where it could be used with various grenade type objects, but instead that it only works with the specific charges it is designed for.
I'd maybe be even a bit more concerned if the bot could use 'any grenade type object', rather than something specifically made for EOD, because we'd probably see more of this kind of thing. But of course, now that someone has done it (1) more police departments are going to start thinking of this as a valid method and (2) we probably will see the rise of bots that have more general purpose munitions.