I am impressed at the level that this man (allegedly) scared the ruling class. I think they're making a critical mistake though in assuming that these types of crackdowns combined with a spiraling economy won't just make people who are even more desperate and motivated.
Before Luigi, people who violently lashed out at the system usually targeted colleagues as a way to express frustration or disenfranchised groups as a way to mark a difference in social standing. Generally, these people have been criticized by the public and rightfully so.
Now, there is a target for this group of people that will get praise by the public at large and it is freaking them out. At worst, they expected that the event would be treated as a murder. That Luigi is being celebrated as a folk hero means the next violent gun man is far more likely to target them.