I used the smoke powder pouches I found in the hidden room. They (stupidly) leave a burning surface (what does burn, the stone?), it may be really as simple as that that Nere becomes hostile if he touches the fire. Maybe I was just lucky the second trial. As the game hints at using smoke powder to free Nere, Larian should take care that it's use cannot foul the quest. I will use bombs in the future (which are seemingly filled with inflammable smoke powder).
As someone wrote in another thread, immediately after the explosion, a Create Water spell is helpful, assuming you have a class or magic innate that can do that spell. Alternatively, throwing water bottles helps, but I'm afraid the impact will again do minimal damage and the Deep Gnomes will become hostile (I haven't tested it yet)....
Rumor has it that two smoke powder bombs would also do the trick (only force damage without aoe, I haven't tested it yet either).
