I choose to ignore the request and kill the tree... it fits sebilles personality better as the tree is like a slaver controlling slaves... i felt it would feel better to have her end it and let the elves decide things for themselves from then on rather than be told what to do... however this leads to the entire village being hostile and you must kill them...
when questioned later about it sebille said to me she felt sad about it.. but still felt it was the right thing to do.
the tree is basically a parasite... feeding off the elves life essence... and when it starts to run dry a new elf has to be sacrificed to it... 
in my mind they are better off being free from the tree. 
You will have a part in Arx where it will give you some other perspective on this, this was a bit lol wtf moment there.
It's truly not that one-sided as you think.