RTF is a global modification that replaces all towns in the game.

How will the good guys and the bad guys coexist under the command of one player?

Yes, the idea is this: after Arantir's death, the Black Guard either becomes prisoners or comes under the command of the good guys. In both cases, the Black Guard will later have to fight alongside the good guys against the infected orcs, and that's when their relationship will start to improve, at least there won't be mutual hatred.