That scene where Cain pulls his gun on Raw actually annoyed me a bit - one of my favorite moments in the original was when Dorothy'd been the one to face down the Cowardly Lion to protect Toto.
But yeah, I think Cain simply read the situation and wanted to show DG that Raw was harmless. (Although I'm totally biased - I see where the Cain/DG comes from, but I adore their interaction as father-figure/daughter so much I actively dislike the idea of shipping them.)
About the Northern Island, I think Glitch saving him did go a very long way - but my money is on most of the cheer coming from his hope for being reunited with his family.