The OP could have handed the deployed SMB to someone else in the group. Even though the others couldn't shoot a bag, they could most likely roll up the line, or just ascend on the line. Then rescue the paniced diver (take his SMB, and ascend with him to the surface, sharing air as necessary.)
This really depends on whether you assume that the other guy with the SMB was just stressed or completely frozen and useless, and whether you think you could get him to the surface safely.
Sometime you just have to make a call and go with it. If someone gets pi**** it really doesn't matter as long as everybody ends up on the surface unhurt.
Terry
I agree with you, probably best to just thumb the dive and get to the surface. Better a wasted dive, than a wasted life.