Did he say that? Not being sarcastic, I just don't recall him saying that it all hinged on identifying that person. "Still not enough evidence" does not mean the appeal yielded nothing useful at all. It may well have done, but still lacking the final piece of the jigsaw that would ensure a slam dunk result. Let's also not forget that this isn't just about Madeleine McCann - he's being investigated for a number of other crimes and has been for years. I find it very hard to believe that the Germans would jeopardise these investigations all for a case that didn't even happen in their country and against a foreign national. It just doesn't make sense to me.
I believe they put the pieces together while investigating something else, perhaps a paedophile ring, and his name was caught in the net along with many others - hence the time delay.
As I said, I doubt they took the decision lightly and was discussed way above HCW's pay grade.
The 'gamble', even if we got all the way down the line to a conviction, then he got off on a technicality in the ECHR 8 years later, would still be a result - he's been proven to be the culprit and now everyone knows it, he's just got off. Job done really, what have you lost? Reputation, prestige? I'm sure Germany will cope.