Is the sunk cost fallacy always a fallacy?

[Manga Shoggoth]

But the point is, he doesn't want to. He didn't quit when the Epic lich was at his mercy, he didn't quit when Right-Eye presented him with a seemingly viable alternative, he made no attempt to win Tsukiko over to replace Xykon, he made no attempt to nurse a browncloak as a potential replacement, he did nothing to let his enemies do the job for him. Redcloak is still engaged in a fallacy even if he can't act at this precise instant, because his thought process and his feelings are independent from and precede his actions, and they are deeply rooted in the sunk cost fallacy and in his need to prove to himself that his decisions were the right ones and that he's not to blame.

Epic lich at his mercy? Well, sort of, except he still needs the high-level sorcerer, and Xykon was still the only one available.

Right-Eye? Redcloak was on the verge of accepting that until Xykon turned up with a "join me or everyone dies" offer. (If you mean the assasination attempt, well that was in the middle of a combat which would have been good for the assasination attempt, but with a really bad outlook if it failed, and not a very good one if it succeeded)

Tsukiko? No point in even trying - she was a delusional teenager fixated on Xykon as a romantic ideal.

Grooming a replacement? He doesn't seem to be doing much for that, I agree - but He might simply be reluctant to dump someone else with the mess.

Need to prove himself/shift blame? Yes, there is a large element of self-justification in Redcloak's narrative, but I don't think it's really sunk cost when there's very little in the way of alternatives. Recruiting Xykon wasn't a bad decision, Lychifying him was a bad one, but taken when he had little alternative.

Gobbotopia is really the only alternative Redcloak has, but it is not yet proven to be stable and even that is threatened if Xykon decides to go even further off the deep end and obliterate it in revenge.

Redcloak's situation is less sunk cost fallacy and more tiger by the tail with a side order of tunnel vision. He may have a way of obliterating Xykon, but he can only use that once, at the cost of losing the epic-level sorcerer he needs and at the cost of losing everything if he fails. So he'd better be pretty certian that he wants to use it.