Re: Pistol = wildcard ? Not exactly...
Hmm. The intent was not that the pistol can be anything you want - rather it just enables you to successfully defend against accusations of bluffing. But since you are not supposed to be carrying firearms you have to bluff to hide it.
The pistol is one of the more complicated cards, and I obviously didn't do a good enough job of clarifying your case. The relevant bit is actually covered under the rules for the wire cutters - "Reveal another card to all. If it is the bomb, and you can prove that you weren't bluffing you WIN the mission. Otherwise, shuffle the two cards together."
So in your case, the pistol holder pretended to have the wire cutters and was challenged, but successfully intimidated the challenger. She then revealed the bomb, but you obviously can't defuse a bomb with a pistol. According to the wire cutters rule you can only win if you can prove you had the wire cutters (which she can't) so she should have admitted that she didn't have the cutters and then shuffle her card together with the bomb and put them back in place. Normally you wouldn't have to show your actual card, but in this case the other players should be able to figure out that after the successful bluffing defense it could only be the pistol.
Whew! That's probably about the most complicated scenario in the game I think, and I obviously need to clarify the rules. I might just specify that if you have the pistol you can't say you have the cutters, and that should fix the ambiguity.
Thanks for playing and reporting back! I'm glad your family are enjoying the game. Let me know if you have any other suggestions for improvement.