None of my friends are that retarded.
I know, the dreaded R word. Apt, though, if you're pointing a weapon at yourself and your friends. There's something wrong in your head.
I'd never make a sudden move at an armed man, especially if he was displaying irrational or suicidal behavior. That's a recipe for tragedy.
At the same time, I wouldn't stand by and say nothing or leave. There are tremendous social pressures in a crowd. So many have been socialized to mind their own business, stay quiet, he must know what he's doing, etc. Kitty Genovese, Bystander Effect, whatever you want to call it -- speaking up when there's a crowd of people accepting a behavior is hard. If not you, then whom?
Well, I'll be that guy. You should, too. Make your disapproval clear in your voice and expression, speak loudly, take charge. If they're impervious, make it clear (vocally!) that you won't be around someone that dangerous and leave, hopefully you'll take anyone with sense with you. Lead the pack of people who are too afraid to speak up.