That being said, this sounds like a complete overreaction by the pilot and calls into question the use of military hardware and personnel to fill this type of role. Would a low flying news chopper pilot have mistaken an Ugly Stick for a weapon?
This type of activity is exactly what the National Guard is around for. It doesn't call anything into question except for the water rights issue.
Ever hover a blackhawk over a pond with a 5,000 pound pendulum swinging underneath? I'm sure the pilot had a lot to focus on...and I'm sure dropping his sling load was on the top of the rehearsed/required actions when faced with a perceived threat.