No, Raoul, the plane should have been shot down immediately
Because it COULD have been an actual terrorist attack. In which case the "collateral damage" you fear would have been far surpassed by the actual damage of the terrorist attack. The German authorities had no idea what could have been on that airplane, what the hijacker could have brought with him, or what his actual target could have been.
Now if you're a clever Al Queda operative, now you know exactly what to say and do to successfully crash an airplane into your desired target in a German city.
So stadiums full of thousands of German football fans are at much greater risk today, due to the lack of resolve and the demonstrated timidity of the German authorities.