I don't think you understand the situation. MC was going to see them, which on the surface was dumb. These were the people who kidnapped his father. Normally he would have been killed or captured trying to enter - he got Ailil to take him to Medb which solved all of Ailil's problems - pass the buck, let her decide to do with the Templar heir - of course he'd be hunted down if he took off. He's an enemy inside their territory. MC needed a way to shift the narrative - to change their minds about him so he would get a chance to talk to them - sparing Finn when he was under no obligation to do so - was that chance.
With respect, I think it's you who are misunderstanding the situation.
The MC showed up to talk, and was granted safe passage TO Medb by Ailill; Ailill never warned the MC that he could be in mortal danger the instant he finished speaking to Medb, nor did he ask Medb to grant the MC safe passage back to Neverwhere once the audience was over (and that's assuming he couldn't have granted such a thing himself). That's a suspiciously large gap in his protection, but I might be willing to overlook it if the story ended here. Sadly, it does not.
As we all know, the instant Medb turns the MC away, Finnabair says she wants her revenge. Ailill disapproves, but he does nothing to actually
protect the MC from what is obviously coming nor does he ask Medb to do so. Given a chance to run rampant, Finnabair challenges the MC to a duel "to the death." Ailill disapproves harder, but Medb's jumps into action... by asking the MC if he accepts the duel. Neither of the adults tell the MC what this duel entails - you know, things like "defending yourself automatically accepts the duel!" - nor do they mention that he could win the duel simply by disarming Finnabair without actually "to the death"-ing her. Might have been useful information to convey, don't you think?
Anyway, the MC
explicitly refuses the duel, saying he didn't come here to fight. Finnabair says he's dead either way, since she'll just kill him when tries to walk away. Still no objection from Ailill or Medb. The MC
again turns down the duel, telling her he'd rather "deny you the satisfaction of getting what you want." Ailill finally gets off his ass and asks (indirectly) Medb to stop the fight. Medb says it's the MC's choice alone whether to accept or decline a challenge he's already declined twice; as she says, Medb has no interest in protecting "some human." At this point Finnabair draws her sword and slashes at the MC's throat to force the issue, and NOW Medb is all "oh noes, you accepted duel! No take backs! So sad."
I'm sorry, but it's pretty clear Medb was perfectly happy to let Finnabair murder the MC, and Ailill was resigned to it happening. Nor is there much reason for the MC to believe that the duel could end with both parties still alive. From the way Medb was acting before, sparing Finnabair's life would simply lead to her getting back up and trying over and over again until she kills him. Medb had plenty of time to alter the rules of the duel BEFORE it started, and she did nothing. The MC making a big show of sparing Finnabair's life was pure metagaming.
Personally, if this had been a tabletop roleplaying game without predetermined choices, I doubt I'd have even bothered asking Finnabair to yield in that situation. Not to say I'd have killed her, but I'd probably have tried something more drastic, like cutting off her hand or putting the legends of Durendal to the test and trying to slice her sword in half. Fortunately this was a computer game so Finnabair was able to escape the consequences of her actions and go on to worm her way into our hearts. But that doesn't exactly excuse the ungodly callousness of the Alfar leading up to her epiphany.
