After the second encounter with Balio and Sunder, Nina the princess joins you and suggests you leave the dungeon through the royal cemetery filled with undead instead of going back up into the castle. What was that kid thinking? She had a key! Even without the key, she could have asked that guard to open the door.
To be fair, Ryu was thrown in prison because the King of Wyndia thought he was associated with Balio and Sunder, so Nina taking a kid who was in jail into the castle after he just broke out of prison may not be the best idea. It doesn't help that the guard is fast asleep the whole time.
So have we to conclude, that it was her idea from the very beginning to go through the cemetery? The king might have forgiven Ryu on the fact, that he was merely a victim. Keep in mind, that the king prior has acted in the heat of the moment, because of Balio and Sunder. Given time the he would have released Ryu after some time.
Heat of the moment or not, one would think he'd realize right away the crying little boy getting kicked around by two grown men was PROBABLY innocent. Nina's parents aren't the most reasonable sort, no matter how Nina tries to explain things to them.
When Teepo offers you the chance to surrender to Myria, Thou Must refuse. When Myria makes the same offer, however, you can accept it and be sealed away in Heaven. Wait, what? It may be just me, but the Bad Ending forces you to turn Teepo's death from tragedy to farce. Why couldn't the designers have allowed you to stay with Teepo? If that were possible, then it would become a more meaningful decision.
Ryu didn't have all of the facts, choosing to stay with Teepo without any knowledge of why besides "Myria says the brood can destory the world with their power." would be a foolish choice. Myria explained her motives and Ryu had the necessary information to make the decision.
Teepo attacks you with the intent to kill. No one in the party is willing for that to happen, plus half the party have no idea who Teepo even is. They would be more willing to bring him down. Myria, on the other hand, is a god. Who knows what would happen if you killed her? Plus, she actually backs up her statements. Even though Teepo is you friend, he's still just a zealous punk with no leverage whatsoever and he could have given up before he was mortally wounded, but he didn't. On top of all this, Ryu and Rei would have been so taken aback by Teepo's attack that they acted on instinct and fought (rightfully) to defend themselves. Again, it's not their fault Teepo made a suicidal attack on them. You have to assume that there was no way to subdue him without Ryu and company endangering their own lives.
On a less serious note, is Ryu barefoot as an adult or is he wearing boots. I seriously can't tell...