Your theory sounds about right. The father says his son wasn't there to make money, and that the terrorists killed their best friend (his son). As far as I know, his father is also the only person saying Nick was a Bush supporter, which could be a blatant lie to try to cover for his son's actions (working to undermine our troops).
As a poster on another thread speculated, Nick seemed remarkably calm and in good shape on the video. Perhaps he was working with his killers in an attempt to make a propaganda video, with the understanding that he wouldn't be hurt (kind of like the story on those Japanese war protesters). However, since he was Jewish, his captors decided to kill him, regardless of where his sympathies may have been.
This is all just speculation, of course. Hopefully this story will eventually come to light.
Lots of interesting speculation throughout this thread
If this is as bad as it is beginning to look, I reckon pops is imagining he might meet the same fate as his son, albeit done much more humanely and as part of the US criminal justice system. You can bet your boots that he's covering like the dickens if indeed there was Marxist undermining treason at work here.
Someone could check with the board of elections to see if he is registered as a (R) of (D), then we would know if daddy is lying.