Mostly agree with the OP. I guess there are only so many dialogue options you can give the player before they become too difficult to manage in the game world. A lot of the scenes we are involved in are just there to set the tone for the player I feel. If you agree with Kaga and condemn Arabella, you are essentially taking an evil path. Save her and make her promise to think about her actions before doing anything like that again, you are taking the good path. So yeah, I agree there is not much in the way of middle ground but there is enough to keep the story flowing. Besides, being fed to a bugbear would probably be a more effective deterrent than a sore bum.