Yes the situation could deteriorate, but only as far as the loss of the use of that engine which is not life threatening. However this engine stayed running and there wasn't any indication that it would do otherwise.
Obviously, a selection of messages peripheral to the No. 2 engine means that something potentially very serious is wrong in that area, affecting multiple components. Also, there is no way of determining possible collateral damage. Clearly if a sizable chunk of engne cowling has detached, there is no way of assertaing what else it hit on the way out and probably no way of being certain of the affected phases of flight to help hazzard a guess at what may also have been exposed.
Given the infomation presented thus far, choosing to continue was a very puzzling decision.