Erich is just so close to the edge for most of the post-WW2 years, it could very easily have gone that way (and Biggles knows how close it is, so it's not even really a surprise for him, or at least he tells himself that). And yes, he'd tell himself (and Algy) that he's sad for the wasted potential, but he's really grieving for Erich himself. :(((

(Happy ending though! No Biggleses or Erichs were harmed in the making of this fic!)