There have been some very cool interpretations about the themes of Tyreen's death. I suspect that, in addition to the reasons already listed, it may have been intended as a punishment on Dundee in a "careful what you wish for" kind of way. Early in the film Dundee threatens to have Tyreen tied to the same tree as Chariba - later Tyreen vows to kill Dundee because of the O.W. Hadley tragedy. For a moment during the climax they smile at one another as Tyreen retrieves the flag & hands it off to Dundee before being wounded - and then Dundee can only watch in horror as his former friend rides off to face the incoming French lancers, sacrificing himself in a desperate bid to buy time for Dundee and the others to escape.
It's another failure that Dundee must live with. He set out with a rag tag group of misfits with only a vague idea of how he was going to bring down the Apache, convinced he would return in triumph and be recognized as military genius, proving his Gettysburg critics wrong and reveling in fame, fortune and glory. Instead he returns a battered, broken man with less than a quarter of the men he set out with, he has lost the love of Teresa and in addition to the other deaths on his hands he's responsible for the death of the man who was once his friend, another failure showing that deep down Dundee is not the man he thinks he is.
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