Help DMing attack on a town

[CoerciveUtopian]

This is specific to Beyond the Vault of Souls but I think can be useful to DMs in General:

There's a part in BtVoS where the players approach a Demon town and have to get in. In my game the players totally blew all their bluff/diplomacy checks and are now fighting a bunch of the town guards. The guards are strong and numerous enough that they will be able to overwhelm the party.

Suggestions for how to run this?

I want it to be fun for my players but I also can't really think of a way out of this for them. A couple options:

1) The party manages to flee (this is the easiest since they can regroup and try something else).
2) The guards "kill" the players and the players wake up in jail and have to figure it out from there (this is a bit cliche and they just went on a major shopping trip so I feel bad about taking away their stuff).
3) They die and we start with new characters (not a great solution: we have been playing with these characters for years now).

Thanks in advance for your help!

[SorrySleeping]

Pathfinder is not a war game. Running away is sometimes the BEST option.

Run away. Buy disguises or hire an NPC to get inside for them.

[Mr Jade]

1. Run. Running is acceptable.
2. Divine salvation either pre- or post-mortem.
3. Total Party Kill.
4. Demonic Lords begin to quarrel over the spoils and it incites a small intra-demonic conflict, allowing the PCs more opportunities to flee, regroup, or fight against smaller numbers of demons.

My choice, 3.

[Hugo Rune]

I think you should make it obvious that fleeing is an option.

You could have some fun making up multiple chase routes and remember to think in 3 dimensions. Street level, sewer level and roof level at a minimum. Buildings with open doors, crowded markets, wagons blocking the route, watchtowers etc etc. Maybe use it as an opportunity to introduce a contact or ally. E.g. the thieves guild agent who is curious to find out more about these people the town guard are so keenly chasing provides safe harbour for one in a hidden bolt hole.

[Rub-Eta]

If they're threatened by the town they're in, I'd say that their quest is to GTFO.