All right. Neither of the choices seem too good to me, so we might as well try to come up with something freeform.
Fangshi, does the power granted by Gods depend on the specific place where one calls upon it? Can it be that here, near the place of her wordhip, the goddess is capable to manifest more of her powers? Seeing as how fetches could borrow the power of their gods through the
dimensional rift, this seems unlikely, but I might as well ask. What do we know about divine powers and how one disrupts the connection between a god and its followers?
I am afraid that if we finally get rid of Miosguinn, a new leader will arise backed by the same goddess. Why not?
The problem I see with trying to negotiate with him is that he is smart and cunning, and is unlikely to fall for it. By now he should know our people will not willingly join him, and that we would not abandon our team. Both teams will go there with the intention to kill each other, and currently he has more resourses to do that with his fancy spells.
At the moment, even if we lure him out, it is hard to determine which Miosguinn is the real one. I would suggest using our stock of satchel charges to mine a large enough area and thus make sure that he would be dead whereever he is. The problem, of course, would be luring him there and not getting caught in the blast. Unfortunately, we can't covertly mine the field where the negotiations will take place.
What I would like to do is to feign defeat, and lure the forces Miosguinn has left into a deathtrap by planting a few suggestions here and there and making them go for the kill once they think their prey is helpless. Without his forces to back him up, the mage is not that scary. For this plan to work, we need to keep our presence a secret. We need to set up a proper line of defenses and/or barricades near the ramp - the fact that this path remains wide open bothers me.
I guess this would be
D? Entrench ourselves further, try to get the smelting torches to work, make cocktails out of the brewery, mend the wounds, barricade the ramp and ward off the chapel - basically, prepare the battlefield and do the same thing you do in A. Then prepare the trap, show his forces that you are desperate to finish this one way or another, charge out with the Reds/Silvers and some of the dwarves while our core group lays is wait, and then retreat. Even if Miosguinn himself might suspect something, we can make his forces fall for it. These creatures do not want to be denied fresh food, and it shoud be easy to make them charge blindly:
The creature lay in hiding, watching, waiting for its chance to attack. The doors had closed and trapped it outside away from its prey, away from its food. Instantly it thought of betrayal. Had its companions locked it outside? Unwilling to share the warm, fresh meat that awaited inside? Rage bubbled to the surface of the creature's mind, it would find a way in! It would eat!
Once they are all inside, close the gates (with their own claws, if need be) and have something in place to help them stay closed - a crude trap with something heavy dropping from the ceiling and barring the exit should do, or install some kind of metal bar lock that is easy to lock but impossible to unlock quickly. Then have a field day. We have already dealt with 20 of the spiderfolk alone, and now we would be backed by what is left from the Reds and the Silvers. If we trap Miosguinn with them, good, here goes carpet bombing. If not, they will be cut off from his support spells and fall easily.