I think the OP handled it OK.. right up to the point when he completely screwed up... I think the decision to put the guy on an octopus was reasonable, since it would have the effect of calming the diver down and also helping to re-assure the victim that he will not be abandoned.
If I were diving and had a freeflow, I would have just ascended. If I was with a good diver I trusted, I would not have offered my octo. If I were offered an octo in that situation, I would have rejected it.
The fact that the victim, accepted the octopus indicates to me that he was a little stressed by the situation. A DM should have been very prepared for problems during the ascent and should have been able to control the ascent rate better. I would have slapped the victims' hand and tried to gently take control of his inflator if I saw a problem, and would have modulated the ascent. Certainly there was no rush to the surface from 80 feet.
At the very least, the DM should have been able to lay out flat on his back and make a ton of drag to oppose the buoyant victim. And he should have dumped his own BC too.