Late to the party, but yeah, Kagha is like two characters packaged into one - a neutral evil facade of ruthlessness, or a neutral slide down the wrong path. I suspect many never side with her in any situation, even when the devs wanted people to explore the more evil potential of the story.
I think this rather overt villainy is to juxtapose an extreme towards the Tieflings. In terms of stereotypes, wood elves are supposed to be free-spirited, good aligned characters, whilst Tieflings are drawn to evil due to their hellish ancestry. Larian have decided to flip the stereotype to create a cartoonishly evil proposition where elves are evil, and a child is held at fang point to prove a point.
The simplest way to fix this is to add other options to diffuse the situation, especially with lower difficulty checks. Propose an alternative punishment like sweeping leaves, actually allow someone with Speak to Animals to persuade the snake (and give the a snake charmer achievement or something), or even allow certain Clerics (there isn't an option for Silvanus or Nature Clerics, though that might change) (or Druids when they get implemented). Curiously enough, Wyll has a slightly different dialogue option, but otherwise doesn't change the DC18 check.
Beyond that, I wouldn't mind having the redeemed Kagha as an optional companion for the party, though that obviously has three problems - the first, is that maybe only a quarter of players will have the option, the second being she doesn't have a tadpole and thus isn't centrally tied to the plot, and third being the voice resources needed to make her relevant when they could focus their efforts on many, many other things.
