I seriously can't put into words how incredible Lords of Shadow is as a game. It took a dying saga and brought it back to the awesomeness that it was known for. The story of the game is one of the reasons why this game was such a huge success, and this scene is definitely one of the saddest and most unexpected moments in the game (well, that is until the ending). It came as a big shocker to the player to see that a character that has been supporting you since the beginning of the game, who helped you when you were in trouble suddenly becoming a boss in the game.
And the reason why he did it made the whole thing even more dramatic. In the end he sacrificed himself in order for Gabriel to succeed in his mission. One of the main reasons why this one is a shocking moment it's because we didn't expect Pan to actually die after this, I mean he's a god. Yet he died, and he did it for Gabriel, a man who believed wasn't worthy of his sacrifice.