SPOILER to those that have not seen Sicario yet, don;t read....
That's a hard one to answer. Hypothetically, I'd say I would have killed the guy but probably let the kids & wife go, but honestly that's something that might have a different outcome if I were in that real situation. The guy killed his wife & daughter in the most brutal way possible, so killing his family in front of him is the most agonizing death you could pay him back with. I want to say I would not have done it....but then again in that situation, I may have killed the family and actually let him live so he had to face the agony of his families death every day of the rest of his life.
Guess I have a bit of a vindictive side maybe