The poem "The Man He Killed" is told to us by an unnamed narrator (a man in a bar) who overhears a one-sided conversation (a kind of dramatic monologue) made by a soldier who killed a man. Remember, there's three guys: the soldier who killed a man, the man he killed, and the narrator. Even though the soldier does all the talking, he's not really the narrator. The narrator simply transcribes what he says and relays it back to us. Therefore, Hardy uses vague pronoun usage to juxtapose the men (who is friend and enemy?) and to show the irony and confusion of all involved.
So, even though the title "The Man He Killed" is third person point-of-view, the dialogue has been filtered to the reader through the original listener, who serves as an imbedded narrator, a kind of outside speaker. Since the poem is one-sided conversation (it's all quotes), this imbedded narrator never truly speaks in his own poem. He is thus in the same position as the audience.
Why does this imbedded speaker never comment on the dramatic monologue? Why does he never insert his own "I" in response to the soldier? He knows that any commentary is unnecessary. Also, he may not have even been talking to the solider: he may have only overheard this in the bar. The soldier speaks so naively and ironically, using so much bad (circular) logic, that any words of his own would diminish the humor and irony. Some things are better left unsaid.
The poem is rife with irony, including the title. In it, Hardy shows relativism and perspectivism using irony and POV shifts, both of which blur the lines between friend and foe, speaker and listener, soldier and civilian, patriotism and murder. In short, the pronoun confusion mirrors the soldier's moral confusion.
As a side note: Tim O'Brien's short story "The Man I Killed" is told entirely in third person. More irony, huh?