Certainly wise enough to try and at least spend the attempt salvaging the situation.
Or even evacuating the city then sending in the army with the new knowledge of the situation.
Its quite likely Cherryl is herself held captive by her nightmares.

Also slightly uncertain about who should be blamed most for this mess.
The Secret Police for not informing anyone else of the hidden danger.
Or the Army/Royal Guard for not telling anyone in the Secret Police they were going for Malhart.