Okay so since I just joined, let's list obvious problems current ending has, and why it's a terrible tragedy. Dammon - he promised to figure something out, turns out he just can't, wow peak story telling. Why can't enriched infernal iron do the trick? Gondians - why aren't we allowed to at least try? Steel Watch - again, why aren't we allowed to at least try? Divine intervention - how many gods can we ask for a favor? Does gods hate tiefliengs or something? Mizora - they know each other and she kinda... Oh I don't know is known for making pacts with people? Why can't I make a pact to save Karlach? Also it would add some edge to the good ending.
Saying all that, people should realize this is NOT a good tragedy. There's this really old anime Chrno Crusade, and from the start you're told the main character has a pocketwatch that basically gives power at the cost of her life. That's it, no chances, no ways to restore her life, no way of getting the power differently. And she's desperate to save her brother, so you know this won't end well. With Karlach we get cheap hope baiting through the entire game, only to never be allowed to even try when solution is right in front of us.