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Actually, I didn't even bother with that... almost all the neutral elves joined me on their own, without any diplomacy. Then I easily captured the elven Castle, mines, and continued to explore and gather resources before finally capturing the Inferno Castle, where its heroes were stationed. I didn't even rebuild the elven Castle; I sacrificed all the elves (except the archers) in the sacrificial pit for experience. I wandered around, explored, and then gathered everyone I had and headed towards the dragons...
Nobody knows who I really am...
I'm just so pretty in my pain...