I think one of the soldiers mentioned 10,000 out of 30,000 was killed, and definitely more hobgoblins have moved in.
Their army consists of Hinjo, Kazumi, Daigo, nobles, and an army very much reduced in size (and consisted mainly of civilians). They're also thousands of miles away. I wouldn't bet on their chances.
I think what they meant was that Niu is not in a position of command or influence to significantly change diplomacy tactics.
I can trust that the Azurites driving out the hobgoblins and retaking the city will not do any wonders for the cycle of revenge (and will most definitely create a Redcloak 2.0)