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The Archangels should be positioned in the lower left corner, behind the cross. You need to blind the attacking stacks from both sides and use Forgetfulness on the ranged attackers and the fairy dragons.
Based on the screenshot, I would test this tactic first. I don't want to try loading a save, as it wouldn't be as interesting to play afterward. Marmot
By the way, I only recently noticed that even after the Azure Dragons die, the fear effect they inflict sometimes still triggers.
From my observations, this happens if the AI resurrects the Azure Dragons during a battle after they have been completely destroyed.