The decision not to prosecute was probably based upon Popper's claim of self-defense against an aggressive attacker. All he would have to accomplish at trial would be convincing one jury member that he was reasonably in fear for his life in order to avoid conviction.
Prosecutors must evaluate all cases and decide which are most likely to result in conviction. There simply is not enough time, enough judges, enough courtrooms, or enough budget to take every case to trial. When a defendant is represented by legal counsel, appears to have a reasonable chance of acquittal, and refuses to plea bargain to a lesser charge, the prosecutor may decide not to proceed simply so the stronger cases can proceed instead of throwing away days of court time with little chance of success.
Happens every day in every jurisdiction in this country. This doesn't mean there was not probable cause to arrest, sufficient grounds for prosecution, and surely doesn't mean the man was innocent. All it means is that there are a lot more cases than any court system can possibly take through the trial process.