Yes, Narciso is able to identify with Lupito and in addition, do something that others are apparently unable to do. He feels immense pity for Lupito and the way that life has turned out so badly for him. He sees others trying to treat him as a criminal, or what is more, a beast, and he does what he can to help Lupito. Of course, it is the killing of Lupito that sparks off one of Antonio's big questions, which is why evil exists in the world.

Who wouldn't feel sorry for Lupito?  Here was a war veteran, who served his country and came home with mental illness, what we now call PTSD.  Not only does Narciso identify with him, he feels for him as a person, as a human being who is not aware of what he has done.  He does not want to see him punished as a typical violent criminal, he wants him to be helped.  At the same time, he fears this is not really possible.

Narciso sees much of himself in Lupito. Both have been cast out by society; both are trying to deal with the pressures of soldiers returning home after war. While Narciso drowns his own pain in alcohol, Lupito's pain consumes him in the form of hallucinations. He shoots the sheriff because he imagines him to be a Japanese soldier. Later, Antonio hears him scream about Japanese soldiers on the riverbanks. Narciso recognizes this pain, & tries to save him from mob revenge by encouraging him to come out, while attempting to talk the other men out of vengeance.