What should I do as a DM

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I am a DMing a game (my second campaign i have ever DMed, so im pretty new and generally pretty lenient) for Hoard of The Dragon Queen. The party has just decided that they are going to accept Talis's deal and have gained the information for the cloud giants castle and because it says "Regardless of the parties interactions with Talis the characters reach 7th level with milestone experience rule (which I use because I personally prefer using that system). However because they reached 7th level, and I gave them the abilities they now believe they now have the power to kill her (nearly everyone is chaotic neutral or chaotic good, except for the pally but even he says he can kill her because his players bond is that he must completely and faithfully serve Bahomet, which technically means he should kill anyone that serves Timiat). I want to revoke the 7th level because their decision is really cheesy and metagaming-like, but they argue its raw. What should I do? What counts as the end of an interaction, just so in the future I can figure things like that out?

Sorry for the bad writing.

[Laserlight]

I am a DMing a game (my second campaign i have ever DMed, so im pretty new and generally pretty lenient) for Hoard of The Dragon Queen. The party has just decided and because it says "Regardless of the parties interactions with the characters reach 7th level with milestone experience rule (which I use because I personally prefer using that system). However because they reached 7th level, and I gave them the abilities they now believe they now have the power to kill her (nearly everyone is chaotic neutral or chaotic good, except for the pally but even he says he can kill her because his players bond is that he must completely and faithfully serve Bahomet, which technically means he should kill anyone that serves Timiat). I want to revoke the 7th level because their decision is really cheesy and metagaming-like, but they argue its raw. What should I do?

Well, the first thing you should do is rewrite your question for clarity, and fix (or remove) the spoiler tags.

Given what I think you intend, I'd say that if the players have gotten a level, then they've gotten a level. You appear to be worried about metagaming, but reversing their level-up is also metagaming. If they do something stupid or treacherous, well, it won't be the first time a party has done that; rather than saying "You lose a level" or "Your magic items disappear" or something of that sort, you need to figure out whether other NPCs would have any way to learn about it, and what they would do about it.

[StoicLeaf]

Erm, you might need to explain that a bit more, I can't figure out what you're trying to say.

Your party reached level 7 and now want to go fight the boss but you don't want them to because someone knows they can take the boss with the level up?

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I think laser light explained it pretty well to me. I also was wondering what the end of an interaction actually means. Does it mean when the party stops talking to them and any other things the party does with the character entirely or when (in this instance) the part will walk out of the room, end the interaction and gain a level, then walk back in as 1 level higher and murder them. I will let them do this as I am lenient with them, but I just wanted some outside opinions since I am inexperienced as a DM (I was one of those cases where I wanted to DnD but had no one around who played so decided to create a group). Thanks for the responses :)

[Laserlight]

Generally, I hand out levels during a long rest.

I haven't read that module, but you might give the NPC (and any guards, advisors, etc who were present) an Insight roll to see whether they can read your party. Low rolls might mean they trust the PCs, moderate rolls might mean "Are you sure that was a good idea? How do we know we can trust them?" and high rolls "They're planning something, I'm sure of it!" Depending on the results, the NPC might call for extra troops, or be alert so there's no surprise, or simply leave.

Of course, if your party has any holy symbols (of, say, Bahamut) blazoned on their shield or otherwise ready to use for casting, the NPCs would be aware of that.

[-̗̀ (ↀωↀ) -̖́]

As for the insight checks, yes I made them and it didn't help she crit failed.

As for Pally his shield came from a part of the cult of the dragon, because the party insisted that it would be a bad idea for him to walk around with a symbol of Bahamut and again I was kinda lenient on that. I have decide to just give them the level but not gain any of the health, ki, or spell slots that come with the level

[Contrast]

I have decide to just give them the level but not gain any of the health, ki, or spell slots that come with the level

Permanently? Either way that seems a bad idea. What are you trying to achieve by doing this? Also favours some classes much more than others (a caster missing out on spell slots is missing a lot more than a fighter who still gets their extra attack for example).

Apologies as I haven't read the module so don't know the specifics. Simple answer is that they don't get to level up immediately on making a decision but once they've actually acted on it. Alternatively, have the target just call in some more guards to bump their challenge rating appropriately.

[Unoriginal]

What is your issue with them killing her?

[Skelechicken]

To answer your longer-term question I would consider the end of the interaction to be after they have parted ways. I would definitely not give my party a level the second they are done talking to an NPC while they are in the same room or the same building. It allows for cheesing like you are experiencing in the worst of cases, and in the best of cases it just doesn't make a lot of sense for the party to suddenly be better at martial prowess or casting because they talked to a person.

As to what you are currently doing, I would highly advise against revoking level benefits. It will impact their character build for the rest of the game. Especially in a module that has a tendency to throw some difficult fights their way, messing with that balance as a spur the moment thing is going to cause problems.

If you MUST punish them (and I advise not to think of your role as a person to mete out punishment or rewards, but rather as a more neutral arbiter of your world) then do so through the story. They cut a deal with an NPC, then the second they gain a fraction of power they turn around and murder that NPC? The cult is large, and they have eyes and ears in many places. This will affect the party's reputation going forward, and cut off potential alliances. I strongly urge you to let them do their dumb thing and let the natural consequences of it catch up to them. It should not be a battle to see who can meta-game more effectively.

[Glorthindel]

Simple solution - I would level up the boss to counteract the level they have gained (additional hit points to counter additional damage they can perform, higher AC to account for higher hit chance, etc). That way, if they choose to take the boss on now, they face a battle as near as possible as difficult as if they had fought her before the level up.