| Surbrus |
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You are arguing that the PCs should have submitted themselves to save the kids but there was no guarantee they would be safe. "Oh yes I agreed to let them go but I did not guarantee safe travel back to the village" would let the LE bad guy live up to his deal while pulling the classic devil small print. "I guaranteed that I would not harm them. The gnolls made no such deal" There is also the possibility that other creatures of ill intent could attack or eat the children. I can think of a hundred ways where surrendering does not guarantee the children's safety.
A better way to carry out the bargain would be to release the children, and even escort them safely back to their village, to make sure that some wild animals or bandits do not harm them. Make sure that they are well fed and comfortable on the long detour back to their village. When they finally arrive safely back at their village, it is nothing but smouldering ruins (because the BBEG sent a stronger group up ahead to attack and destroy the village). Bonus points if the blame is put on the PC's.
If you are the LE BBEG, might as well not half ass it.
That's why surrendering your life to a LE BBEG is not how you "save" the hostages that they are holding, especially if they are so LE that they are dealing with devils in plain sight of everyone.