A man accused of murdering four soldiers in an IRA bomb attack in London’s Hyde Park in 1982 has appeared in court in Dublin on suspicion of murdering two other soldiers in a separate attack.

John Downey, 66, was remanded in custody on Tuesday, a day after his arrest by the Garda Síochána for the alleged murder of two soldiers in Northern Ireland in 1972.

Downey was detained at his home in Co Donegal, in the Irish Republic, on Monday night after being subject to a European extradition warrant.

At Dublin high court on Tuesday he was remanded in custody until 23 November when a full extradition hearing is expected to be held, but will be able to apply for bail on Thursday. His lawyer signalled Downey would apply for bail on health grounds as he has a pacemaker.

The alleged bomber covered his face from photographers upon arriving at the court for the start of a closely-watched case which could rattle Northern Ireland politics.

Senior Sinn Féin figures attended the hearing in solidarity with Downey while unionists celebrated his arrest and possible extradition.

Downey walked free from the Old Bailey in February 2014 after his trial for the Hyde Park murders collapsed because of a secret letter from the British government that gave him a guarantee he would not face trial, a revelation that caused uproar.

Downey was one of 187 IRA suspects given “clear and unequivocal assurance” that they were no longer wanted by any police force in the UK, a concession by the British government to secure an IRA promise to decommission its arms as part of the 1998 Good Friday peace deal.

Downey had pleaded not guilty to the murder of four soldiers from the Household Cavalry who died in the blast on 20 July 1982, along with seven of their horses. The bomb had been concealed in a car and was detonated as the soldiers rode past on ceremonial duties.

Supporters and relatives of the four soldiers killed in that attack: Trooper Simon Tipper, 19, L/Cpl Jeffrey Young, 19, SQMC Roy Bright, 36, and Lt Anthony Daly, 23, condemned Downey’s release and vowed to continue to fight to see justice done. Some families are seeking a civil action against Downey to find him liable and seek financial compensation.

Monday’s arrest, however, related to the deaths of L/Cpl Alfred Johnston, 32, and Pte James Eames, 33. The two soldiers, from the Ulster Defence Regiment, died when an IRA bomb exploded in a car they were checking in Enniskillen, Co Fermanagh, on 25 August 1972.

The PSNI reopened an investigation into the attack after the collapse of the Old Bailey trial, leading to this week’s joint operation with the Garda Síochána in Donegal.

Mark Tipper, a brother of Simon Tipper and a spokesman for the Hyde Park Justice Campaign, welcomed the arrest for shining light on the 1972 attack. “Our own campaign for truth regarding the Hyde Park atrocity has reminded the authorities as to their responsibilities – justice must be done.”

Downey’s supporters, by contrast, were dismayed.

In a statement Pearse Doherty, one of three Sinn Féin members of the Irish parliament to attend the court hearing, said the arrest was “out of order” since the British government had previously stated that Downey was not wanted in connection with any offences.

Doherty said: “That assertion was tested in the courts and he was subsequently released. That judgement should be respected by the British authorities. The issuing of an extradition warrant by the British authorities is wrong and follows a campaign to introduce an amnesty for British soldiers at a time when the spotlight is on them for their actions. John Downey has been a supporter of the peace process over many years.”