Here's the issue to me. We've seen Mike kill 11 people.In addition to the fact that Gus would have slit his throat, there's also this:
If he let him go/sent him to the vacuum cleaner guy, then there's a chance that Lalo would have caught up with him or his wife. By now Lalo has probably figured out that they're constructing some kind of underground lab, and once that is online the Salamancas become MUCH less important because there's less need to smuggle anything over the Mexican border anymore. Gus would then be able to run his entire operation with almost no input from the Salamancas at all. So, Lalo would want to torture anyone with information on the lab until they gave up the location. Mike thinks he's saving Werner AND his wife from a much worse death.
8 cartel hitmen who were a direct threat to his life
1 of the cousins who really needed to die anway
2 crooked cops who killed his son
That's it I'm pretty sure. That's all the guys that Mike has ever killed. They were all BAD guys, they were all killers, other than the cops they were all a threat and with the cops it went even deeper than that.
And all those deaths happen later anyway. AFAIK, at this point the only people he's ever killed are the two crooked cops who killed his son. And now, at the age of 60, he's suddenly gonna become the kind of dude who executes some sweet old engineer whose only sin was getting cabin fever and really really wanting to get away to see his wife?
Mike doesn't need the vacuum cleaner guy, neither Gus nor the Salamancas have any serious reach to Germany, they don't roll like that. All Mike had to do was give Werner his passport back and drive him to the airport to get on the next flight to Germany, maybe tell him to keep his head way the hell down just in case (but really, no one slanging product in the southwest USA is gonna risk exposing themselves with an international hit in Germany, that would be a much bigger threat to the operation than just letting Werner live). Then Mike himself either disappears or just offs himself, he's gotta realize that the end is near for him either way.
You have a guy who was a crooked cop, but no more than that. The kind of guy who robs a drug trafficker but does everything he can to let him live. Once he realizes that he's so deep in this crap with a bunch of psychopathic murderers, he's gotta see he has no way out at this point. Even his granddaughter's financial security can't be the rationale now that he sees how murderous his life has become, the risk of exposing them to the game has become too great, they're more likely to be killed if he stays in the middle of the Gus-and-Salamanca fight than if he just leaves the game right now.