Why does Ponyboy think Dally "died gallant"?

In The Outsiders, Ponyboy thinks Dally died gallantly because he sees Dally’s death through the loyalty, courage, and self-sacrifice Dally showed for Johnny and the greasers.

On the surface, Dally’s death looks like the death of a criminal: after Johnny dies, he robs a grocery store, runs from the police, and pulls out an unloaded gun, knowing the police will think it is loaded and shoot him. Ponyboy understands that Dally wants to die. He also knows that outsiders will remember Dally only as a hoodlum, especially because his final act is violent and desperate.

But Ponyboy’s judgment comes from everything he knows about Dally that the public does not. He remembers “Dally pulling Johnny through the window of the burning church,” “Dally giving us his gun, although it could mean jail for him,” and “Dally risking his life for us, trying to keep Johnny out of trouble.” Those memories make Dally seem like one of the doomed, brave figures Johnny admired in Gone with the Wind. Dally has lived hard, but he has also protected the people he loves.

Johnny’s death is what breaks him. Dally had tried to keep Johnny from becoming hardened like him, and Johnny was the one person who still gave Dally’s life meaning. When Johnny tells Ponyboy, “Stay gold, Ponyboy. Stay gold,” he is asking Ponyboy to preserve the innocence and hope that Dally has already lost. Dally cannot follow that advice himself.

So when Ponyboy says, “But Johnny was right. He died gallant,” he is honoring the hidden nobility in Dally’s life. Dally dies as a “dead juvenile delinquent” in the eyes of society, while Ponyboy remembers the fierce devotion that made him worth mourning.