In my opinion no, i think Ryo will not kill Lan Di, he will probably forget about revenge, i remember that Yu Suzuki said something like this, that in on point of the story will have a stage called "The sadness" and that Ryo will forget about revenge, something like that.
Remember what Xiuying said for Ryo in Shenmue II
She said... "You still don't understand. Martial arts are used to protect people's lives. If you use your fists otherwise, you will walk on the path of evil, too!"
This is one of the reasons why i think Ryo will forget about revenge, i think that maybe Ryo will win a fight against Lan Di but Ryo will not kill him.
After I had posed the question, I later that night came to the same conclusion. Ryo is not an evil man. I have not played the third game, but most people are claiming it is mostly just filler and no major story revelations at least not until the end, but nothing that would explain him turning evil. Revenge in itself is not evil per say, but if Lan Di was beaten and not out right killed, it would be murder. I see Ryo killing him in combat, but not stomping his face while he is on the ground or on his hand if Lan Di was hanging off a cliff.
Then again Lan Di may make it hard for him not to kill him. It is yet to be seen. Lan Di had the chance to obviously finish off Ryo, the son of the man he just killed, but he chose not too. I am sure he knew he would follow him. There are many king fu flicks that go into the subject of revenge, much like any Western or Japanese movie, etc.
But one kung fu movie in particular to me stands out. I do not know the name or all the details, I just know that either the young man's teacher or father was murdered (killed in combat) by this one guy. The guy allows him to live, either to get away or demands that he becomes skilled and then fights and kills him (the killer) in the end. Either for his life or to get revenge, he takes the offer and the killer actually trains him. Many years pass and the young man gets better.
Near the end of the movie, the original killer faces off against another killer. As I said I do not know all the details, but I believe both him and the young man were able to defeat this new threat. Then the "student" becomes the "teacher" with a role reversal and the same proposal is given to the one that initially killed his teacher or father to get better and then kill him (the young man) and that ends the movie.
I know the movie was heavy into weapon use. The initial killer used (modified?) sais. The new threat used two curved swords and for what ever reason, either out of respect for the man he had killed all those years ago or maybe something else, he refused to use them any more until the young man gave them back to him and at that point he (they) were able to defeat the new threat or assassin. If anyone knows the name of this movie, please reply. ^^!