Oh okay, fair enough, I just went back and tried a straight-up fight with all party members going into the middle and holding their ground. The Mage AI definitely seems bugged as they still didn't join in this time. I technically won, although I ran out of resurrection scrolls and had to hide my last surviving Rogue out of sight until Alexander and the worm finished fighting. THe worm won, but it had only 11 HP left.
I did also kill two of my own party members out of annoyance after the Red Prince, teleporting worm and Alexander blocked Lhose so she couldn't move. So I used my explosive arrows to kill herself and hurt the others. The Red Prince was finished by Alexander or the worm.
I then discovered that pretty much no one sells ressurrection scrolls. The seekers had all left, the only three friendlies left had none. (I forgot about the witch on the north coast and the seeker ranger near the armory) I had to return to prison to find NPC's who would sell some.
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Discussion about gear won't be a lot of help since it's all RNG based and can't be reliably duplicated.