Doesn't matter what the player or Paladin thought. Morality isn't defined by a person's perception of events around them.
The argument isn't that the DM says there was another option, it's that given the situation described the option was blatantly obvious.
And, really, that's where the rub lies. To you it's "blantantly obvious". To me, it's not. The dragon delivered a very credible threat and forced the paladin to give up the man. Since we cannot speak to the player's intent, we also cannot speak to the DM's intent either. Only the situation as presented.
Can the dragon take the man by force? Yes. Does the paladin have any chance of stopping the dragon if the dragon decides to use force? No. The dragon's average damage will kill the paladin in one round. The paladin flat out cannot win this encounter. Why is the dragon leaving the paladin alive? Maybe he wants to spread fear about how great a dragon he is. I dunno. Again, none of us know, so, we can only deal in facts.
Fact 1. The paladin has zero chance of opposing the dragon in combat. Can we agree?
Fact 2. The dragon has told the paladin that the paladin can go only if he leaves the man, otherwise, the dragon will kill them both. Can we agree on this fact?
Given those facts, how can the paladin be blamed here? It's no different than blaming a mugging victim.
Huh? How is martyrdom lawful stupid?
How is this martyrdom? What greater purpose is being served? He accomplishes absolutely nothing. He dies, the man dies. A martyr needs to stand for something no? A martyr needs to accomplish something no? What was accomplished here? What purpose was served.
And, again, can I wipe out all the paladins in a world by simply holding a few hostages? You folks never seem to want to answer this.
Yes I read it. Their mission stated they were to return if they had engine trouble. Thus, returning was part of their mission.
Sigh. Yeah. That's the sort of pedantic garbage that makes these conversations so frustrating. Return if mechanical issues result in your not being able to attempt to complete your mission isn't exactly part of the mission. Seriously? THIS is the argument you want to make?