I've been reading these replies for several days, and I think maybe some people are missing a very important point. Just because the characters in the story say something does NOT mean that the author espouses the same opinion. I know that when I write a character's dialogue, I try to write what that character believes. Sometimes, that is counter to what I believe, especially when I'm writing a villain.
He has the super in this story come to the realization that he's been used for his entire life, and he turns his back on his responsibility. He (the character) also realizes that his presence is making it impossible for the hostages to understand the danger they're in and that perhaps there is a nonviolent solution (OK, not very likely, but...). They--unreasonably, in this case, since Smasher's hands are tied, and if he makes any action against the terrorists, hostages will die--expect him to be the Deus ex Machina and save their bacon, so they're not even paying attention to what the terrorists (am I the only one who thought they bore a resemblance to Anonymous?) are demanding. Which were certainly unreasonable demands, don't get me wrong (lest you conclude that I espouse terrorism, as well). I think the helplessness of the situation was explained quite thoroughly within the story. This is not a story of the merits of terrorism. This is a story of one man coming to the realization that he's been duped (by the Union and, as it turns out, by the terrorists), the decision he comes to, and the disastrous implications that's going to have.
Does DeRego believe that terrorists are right and that hostage-taking is a good thing? I strongly suspect not. He's set up a situation in which one of his super characters has to make a difficult decision based on a lot of wrong or simply missing information. The terrorists manipulate him, and it's made clear that Smasher is not all that bright. Were he a super strategist, perhaps he could have come up with a better solution.
That decision will have disastrous repercussions on his pyramid, his reputation, the entire Union, etc. What this story does--in my humble opinion--is set up the groundwork for a potential future war among factions in the Union itself--not to mention repercussions against the Union by the public. Smasher isn't going to keep his mouth shut, nor is the press. Smasher's not just going to go meekly back to work, not that anyone would let him after this fiasco. They're going to lock him up in Antarctica. With lots of other supers who have gotten the shaft for one reason or another. And now they can't even replace the Adam Smasher character with another Johnny Bravo who happens to fit the suit and just smooth things over.
Someone upstream said they keep waiting for someone to take a stand against the Union? I have a feeling you're about to.