Another reason I believe it's better if the player does this is because he's acting to protect Lin, Sylvia and Nia. This also comes after the spiel on Nia's slave route in which he says "I'm not a master that's going to rape you"
(paraphrasing, also don't remember the love route). And it's also proof that he cares for them
As for how to make the queen more threatening, it's simple really. She can't kill you because that'd kinda be mutual self destruction, but she can keep one girl hostage. Let's say she let you go, but she'll keep Lin, as s bargaining chip. This makes the conflict more personal too.
Suddenly you kinda have to cave into her demands or Lin is toast. It can be any other elf with you but it'd be more potent if it were Lin. Again two reasons:
- it's fucking Lin
- Lin can also get her story arc resolved in this way too. You can set her out to become the new symbol for the fight for elvish freedom the way the queen is now. Here is this lowly slave girl, being tortured for trying to help elves all around Syl'nar
Edit: Also if push comes to shove, you could totally be okay with Nia and Sylvia dying. They were kinda dicks to you. They just don't have the same impact as Lin being captured can have. Just think of the turmoil in the hotel if you come back without Lin