Killing the hag saves the masked people. Which is a pain if you don't abuse an ambush attack outside the conversation because if you initiate combat through dialogue she will cast invisibility on the first turn and then on the second teleport away. So I have a dialogue that does not send her into combat and then sneak up on her and get a bunch of ambush rounds to kill her in one turn.
Because sparing the mask people in Act 1 is pretty hard as it's much harder to sneak past them and past the traps to the Hag's lair.
In Act 3 it's much easier as the masked people are by the outer edge of the room while you can sneak through the door, and you can barricade the door with boxes to block them out. Alternatively, you can just kill the hag without hitting the masked people after killing the 3 mushrooms in Act 3 rather easily because your characters by then are lv12 and pretty strong compared to Act1.
In Act 1 if you spared the masked people, the gnome lady shows up in Act 3 and is part of the anti-hag league with Myreena. In Act 3,
if you spared the masked people, the pirate lady thanks you and the entire tavern gives you honorary status and discount on the vendor, albeit the vendor is useless because all he sells is alcoholic drinks.
