In his own way, Linoge wanted to give Mike some peace
Most viewers thought Linoge was being a cruel bastard showing Mike the teenage Ralphie with the eyes and teeth- he "corrupted" Ralphie. I think Linoge- in the only brutal way he knew how- was giving Mike assurance that he didn't kill Ralphie or make him his slave, Ralphie is his protege' who will live a very long life with incredible power.
Linoge is a hard, thousands of years old wizard long devoid of any human sentimentality BUT I think he admired Mike Anderson for having integrity and the courage to stand up to him..."a good boy to the end." If Linoge's intent was to be cruel, he wouldn't have appeared suddenly in San Francisco and just let Mike agonize for the rest of his life about Ralphie's ultimate fate; when he turned and looked at Mike, Linoge wasn't smirking, he was showing Mike he was fulfilling his part of the bargain and it's time for Mike to move on- again, in a rather brutal way, he gave Mike closure.
The reason this makes sense to me is that in the trade paperback version of the screenplay, Mike doesn't walk back forlornly to his car alone after the alley; instead, he collapses in despair, when suddenly a pretty girl appears and asks him if he is okay, Mike replies with his Maine accent coming out, the girl makes a comment about it and asks where he is from, Mike replies from another life or something to that affect, the girl offers to help him with the groceries, Mike smiles at her and they walk back to his car. Mike finally has closure and will move on finding happiness with the girl. I wish the mini-series would have done this scene instead because it showed Mike's courage in refusing Linoge would be rewarded in the end, while his ex-wife Molly- who made the deal- will never really have peace.