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I spent half a day thinking about this puzzle. No terrain cell protected against attacks on the ifrit from two sides at the beginning of the battle. And then I started paying closer attention to that cell. After all, it is so conspicuously highlighted by the author :)
Added 1 minute ago
I was already thinking of moving on and losing 100+ halberdiers.
Update: I managed to trigger the bug, but I had to sacrifice 140 peasants.