The Hag does try to flee, the grease spells keep her from getting far. I have even had her abort the exit and try to fight my party--when she DOES somehow get up. Also, to modify the strategy somewhat to make it even easier, throw a 3rd grease spell (or bottle) in the doorway of the Tea House as well...slows down the redcaps. Then you can spend a couple rounds bombing in spells to help get the Hag down faster.
