A man holed up inside his house with a knife threatening to kill himself is clearly mentally ill.
I don't follow that logic at all. He may have been situationally depressed and anxious (since he had fled from the scene of an accident), but that doesn't qualify as mental illness. I see nothing indicating that he suffered from a diagnosable personality disorder. It's quite possible he did, but I see nothing indicating that, much less that the officer knew that. To me this would be a very different situation if he had previously been diagnosed with a schizoaffective disorder or something similar, and his family called the police because he was talking crazy. Instead, this was a situation in which he had fled the scene of an accident, and was holed up in a friend's apartment with a knife (actually, two knives) and acting upset. I don't know that he was threatening suicide - the article I have seen doesn't indicate that.
I think it's entirely fair to explore whether the optimal police reaction to a situation like this was for the officer to enter the apartment and confront Johnston, but I think that was a totally reasonable reaction, and the officer did attempt to defuse the situation verbally prior to Johnston approaching him with the knives. Once that aggressive move had occurred, and Johnston refused to stop, I have no problem at all with the officer shooting him.