Right now it is better to kill. I knocked out the two tieflings who wanted to kill the goblin prisoner after failing to convince them to stand down.
Every time I got close to there afterwards they tried to kill me again, turning the whole grove hostile. So it's either doesn't work as it supposed to, or it is completely useless
I believe there is a work around really, depending on how much further you progress. Not yet tried it, and could be another consequence of actions as well that changes.
