I agree. OP went against his own beliefs and ratted out somebody for doing something that the OP thought should be allowed. If you see someone smuggling a gun, get an LEO involved. Otherwise, I say leave your fellow passengers alone, the CATSA & TSA smurfs cause plenty of grief without your help.

Liquid bombs require a much larger volume of liquid, and mixing them in an airplane is not feasible because the mixture releases noxious fumes which tend to kill the mixer unless they have a mask AND the mixture tends to burst into flames prematurely unless the proportions and mixing technique are perfect. In other words, the whole idea of terrorists mixing liquids in an airplane in order to bring it down is absurd.

Finally, you say he was trying to conceal his bottle, maybe he was just sleepy and confused, or drunk, or thinking about other things and not really focusing on what would be the best way to send his little bottle through the security aparatus.