I thought Kagha was great.
Not everyone wants to roleplay a bleeding heart do gooder all the time (it's bad enough to have to do it IRL) and she gives us the option to cause more chaos and do more selfish evil. It's nice to have games with LOADS of options for how you play and what you do. Playthough as 'yourself' on a run, playthrough making the seemingly 'right' choices on a run and make a completely selfish and evil run... that's part of the fun.
She didn't even kill the kid, her out of control snake did.. And weather you want to believe it or not she represents a good percentage of the human population today(no I don't mean xenophobic and racist, I mean tribal and wanting to protect their own and their way of life) and yes, I know she's a fictional elf, but that just works out more for my argument than against it as fiction always mirrors reality in some sense and a fictional character can be whatever the creator wants them to be weather you like it or not. Looking just a hundred years or so back in human history will show all of that you need to see and if we compare to our own dark ages (when kings sat in castles and knights rode out) Women and children wore rarely spared. Hell, looking at the middle east and other chunks of the world today will give you plenty of examples of stuff like this... Also, I don't recall being asked to kill tieflings, just tell them to leave so she can seal the grove and protect her people. That's pretty realistic... (Now I want to play a Drow and see if I can kill them all before I tell the goblins where the grove is....just to look for that option)
Reading back to your opening post, It seems like you're just calling for some soft, politically correct, social justice nonsense to be implemented because you don't see how anyone would ever take a fictional characters side in a role playing game because you think it's evil...
"The player is not necessarily incentivized to act on the Tieflings' behalf" - Nor should they be.. that's why it's called a choice... But, I'd argue that they're not really incentivized to act on anyones behalf but their own.
" I basically had to admit to Kagha that I am a racist and wanted to see hellspawn removed from this plane of existence." - Sounds like you don't like that this choice exists because it rubs you the wrong way.... That's kind of selfish and silly.. it's a game...
"If you happen to be a rational human being and ignore the path I described in the second paragraph" - Jesus Christ man.. can you virtue signal any harder... It's a game with story options.. Options that are based in the historical reality of animalistic behavior, including human... and humans have been on this planet for over 100k years. We survived a great many things by being tribal. Really, it's the last couple hundred years that have let us be comfortable and safe enough to pretend otherwise.
"Now, ignoring the matter of the real-world political implications of a xenophobic populist rallying ignorant people against harmless refugees for a moment (because God knows we want to stay clear of that" - PFFT, BWHAHAHA, you do, because you're projecting too hard...
" the problem is that there really is no moral choice here" - Morals are subjective... always have been, always will be.
" If you really want to salvage her character I would start by cutting the child murder scene" - Nope, that scene was important in establishing what kind of person we are dealing with and how out of control she actually is. It gives us reason to go hunting for answers and fight mud mephits. It's nice to see Haslin slap her wrist and talk the childs parents into killing her at the little party later.
In the end it's a game, and trying to project your rose colored version of life on to it just seems ridiculous. Seems like the Tiefling kid being killed offended some part of you and the rest of Kaghas character just added to it. That doesn't mean it needs to go because it upset you.. it was supposed to upset you.. that was the point...