I was wondering if a failsafe state existed for not interacting with the Tieflings and Goblins at all, turns out there is none. So the argument of there being some kind of neutral third path is now void.
I tried that as well. There is no way to avoid the initial fight in the grove. I tried to avoid everything else (meaning I left immediately after the battle was over without entering the grove) but I kinda broke the game.