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One of the major problems with attacking the palace is that it's the capital of a vast state, and a direct assault is essentially pointless – reinforcements will keep spawning endlessly. The advantage is that there are fewer unexpected surprises; if you manage to reach it, there's also a lower chance of encountering Dusk Elves, as they're unlikely to expect such audacity and won't search for us right under their noses, plus there will be time for detailed reconnaissance. You can subdue nameless guards and explore the area; you can try to poison their supplies during any celebration with my blood and cause chaos with ghouls. The only issue is Ihara and the others from the other faction; I don't see a clear way to quickly get rid of them.
Humans with the "Avalanche" ability and similar units seem like the worst option; they'll likely destroy walls without noticing and decimate half the squad in one turn.