While I am totally unfamiliar with Napier, it sounds to me like you were getting some detonation of the lube - meaning that the flash point is much lower than the temperatures reached by the rapidly compressed air in your springer. The rapidly compressing air in a magnum class springer can reach as much as 1200 degrees F - albeit, just for an instant - but that is enough to ignite many oils and synthetic lubes.
If the gun was producing a fairly loud "bang", similar to a rimfire, that is the kind of thing that could very well cause catastophic damage to your springer. The piston seal could become burned, the mainspring could fracture, etc.
What range were you were shooting at for your groups? Were the groups any better or worse than the same pellets unlubed? To try the unlubed pellet grouping, make sure that you fire 20 or 30 unlubed pellets through the gun first, before you do your actual test groups - this way, you will be sure that any trace of the Napier is gone, and the barrel is lubed with lubricant mist from the compression chamber.
Based upon your own observations, I'd say you are correct - just wash the pellets and dry them for use in your springer.
