One thing to consider, is that wierd is not entirely self directed. He has the illusion of free will, but may be compelled to do horrible things, or act irrationally concerning death, the dead, and ghosts.
As a contractee of the death goddess, he is subtly and irresistibly compelled to statisfy the obligations of the natural order, even if that natural order causes suffering. At least when the subject at hand is death. He is aware of this fact, and that it is at odds with his personality quirks concerning choices and personal responsibility. He reconciles it internally that he chose this, and now has to live with it, which explains his seeming devotion to such duties.
He wants to avoid having people contract with divinities because of the subtle loss of personal choice that those contracts often come with. This is the reason why he is angry that eric made not just one contract, but two. He doesn't really blame eric. He blames the gods that eric contracted with for compelling eric to do stupid shit.
As evidenced by the binding of athel to the clockwork body scene, he's perfectly OK with letting a spirit come back on its own, but totally against spirits circumventing the rules. Giving a spirit additional options, if they want it, is perfectly OK.
ZTG:
I would rather see your character stay just as powerful as ever, but willingly choose not to use his powers, out of respect for other people. Part of having a unique skill, power, or knowledge is knowing when NOT to use it. Just recently wierd chided himself for even THINKING of raising the cyborgs as zombies, given that those were people's loved ones, and had already suffered seeing them be 'converted' like that. Seeing them raised as zombies, no matter how useful the zombies might later prove to be, would simply be sick and unfeeling.
This willful decision to INaction is just as important to a character as their decisions to act.
This subtle fact is one of the reasons why I find the christian god as depicted so intriguing, despite being a consumate agnostic. Its a divinity that is all powerful, but for all intents and purposes, may as well not even exist, because it willfully choses to hide itself from the universe and do nothing t all, to preserve free will and consequence! It allows the universe to suffer, and evil to rage unchecked, because engaging in "godmode sue" antics would totally destroy free will.
I would love for your character to come away with a similar philosophy rather than having retcon crippling.
He should come to a kind of conclusion that allowing people to suffer for their choices is better than choosing for them, and that fighting for other people denies them the justice of fighting for themselves, and as such, should limit his own powers by pure personal choice.
After that, if he does chose to take part in a conflict, it should be more in line with a neutral neutral aligned char, or a neutral good aligned char.