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I played this mission twice – once, I developed Irina to the max in tears, and the second time – in blood. Blood is still more profitable and provides more powerful bonuses. =)
Regarding the walkthrough – as Mr. Winner advised, I didn't rush to go to the second town; instead, I thoroughly cleared the map and leveled up Irina. After defending the village, I completed the quests of Ronin and Kirin (I didn't recruit spirits or nymphs). By the way, if you are developing in tears, you don't need to kill Tiangbo, but if you are developing in blood, you will have to kill him; there is no other choice. Instead of Tiangbo, Katashi, the master of lightning, will join you.
After completing these quests, I immediately captured the lower town, Syanzo, I think, and headed to the next ones. I advise you to capture them immediately, without getting distracted by the map; otherwise, the enemies will start running around and bothering you. When all the towns are yours and only Hiroshi remains, you can relax: take your time to explore the map, level up Irina and the second hero; no one will bother you.
The battle with Hiroshi didn't work out in either of my playthroughs: he surrendered. Have a nice game, everyone! =)