DM was wrong to dock XP for behavior.
Anybody claiming to be Lawful in this case is lying. Anybody claiming to be good in this case is just having a bad day -- people are still evil, shackled or not, so killing them whether they're expecting it or not is of the same moral grain.
I've seen two somewhat similar situations, once as a player, once as a DM.
1) As a player, we went against a (I think) Derro compound where they threw *everything* at us. Thier sorcerors cast all of their spells and then immediately said "We Surrender!" To a PC with Sense Motive, that was simply a matter of "We're out of ammo!" and isn't a particularly compelling reason to show mercy. The DM then taught our party's lead fighter (military guy, amusingly enough) a lesson about mercy when he went chasing an enemy fighter through the compound -- he encountered women and children. He's not sure how to react to this... until the women doused him with boiling water from cooking pots. Net result: To the PCs, enemy combatants are always enemy combatants unless/until they can be locked up by people who can afford to lock them up. Generally, the difference between life and death is a 6-second full round action.
2) As a DM in a "nobody's particularly good" campaign, the party leader got a prisoner and tortured him to death. Now killing a prisoner is dodgy (hence this thread), but torturing him to death made me squeamish. In the next session, the leader's patron mazoku (minor deity -- he had 4 worshippers and they were the PCs

) shows up and scares off a dragon the PCs were getting buffed up to fight, gives them a ride in a wagon back to town and reminds the leader that a primary point of his dogma is "Never do for yourself what other people will happily do for you" -- in other words, torturing people to death makes them incapable of being tricked into doing anything useful and is therefore not theologically sound. No other reprimand given. The leader asked "Have I done something wrong, sir?" and the mazoku replied, "I don't know; should I go back and check?" They were disappointed by the dragon getting away, but they seemed to otherwise appreciate how the line was drawn without ex-post facto rulings or metagame expectations.
How this applies here:
1) Cleric was still casting spells and was therefore still an active combatant. Finishing him off is less reprehensible than killing somebody under the effects of
Hold Person that has no recourse at all.
2) Veteran was a troublemaker and behaving like a combatant. If he were freed, he'd probably hold a grudge. PCs know better than to let enemy combatants hold grudges. His execution was unfortunate, but expedient. Be glad that they didn't actually torture him.
3) Last guy was successfully intimidated and released, knowing that he probably couldn't go back to active duty after having given them the information that they wanted. Realistically, he should be quite thankful that the party asked the veteran first -- if he hadn't been intimidated into submission by the veteran's death, then they'd probably both have been executed.
::Kaze (notes that the party he was DMing had a troll in it... and why are trolls evil besides being further up the food chain than the folks that wrote the
Monster Manual, hrm?)