Nick Newman, 33, died from seven shots fired by Detective Senior Constables Tim Carey and Ben Anderson at the Maroubra Junction Hotel on January 26, 2018.
The martial arts expert had just stabbed Detective Sergeant John Breda twice in the ribcage using a combat-style knife, which he refused to let go after bleeding heavily from his wounds.
Other assisting officers told the coronial inquest they heard Mr Newman saying "f*** you," and drew blood from his own throat before collapsing.
Deputy State Coroner Elizabeth Ryan examined the "very significant" and sudden departure on the day from the original arrest plan, and the use of force, among other issues.
In her findings on Tuesday, she said notwithstanding shortcomings in some of the police planning, it was Mr Newman alone who decided to react with "extreme violence," to their directions.
The coronial inquest heard evidence that Det Anderson Facebook messaged Det Carey to "just come out and glock up".
This was a last-minute escalation from the plan that Det Serg Breda was acting upon - as he was not part of the group text message - which was for him to arrest Mr Newman using force.
The police operation had culminated after Mr Newman's ex-wife alleged he had begun sexually abusing an 11-year-old child four years prior, who he started threatening to shoot.
The girl's phone had more than 80 missed calls from Mr Newman, who later told a friend the child had "gone dark," and that he needed to "hunt her down," and he began searching for her.
NSW police issued an alert to fellow officers that he had "an obsession with police and military tactical equipment/methods" and that he was proficient in physical fighting.
A former Australian Federal Police officer and acquaintance of Mr Newman told searching officers where they were meeting up on Australia Day.
The three plain-clothed officers arrived in the hotel's beer garden just before 3pm, where Det Anderson first assessed the situation was of a higher risk due to a third unidentified man in their company.
He told the inquest he sent the message quickly to Det Carey and thought it would be passed onto Det Breda who was standing nearby.
Deputy State Coroner Ryan said the evidence did not indicate NSW Police policy or training needed a review.
"The shortcomings in planning and decision-making revealed in this inquest were not of a systemic nature," she said.
She acknowledged the particularly traumatic events for the three arresting officers and hoped the "passage of time" would diminish the impacts of what happened that day.
