@Syanalassa
While yes, I can see where they come from. I would bet that this whole deal is because witches are stronger than the average human by default. Almost if not all can nott be tied down or suppressed by normal means. So what drives this idea of genocide is fear. Humans fear the witches, since they cant naturally defe d themselves against them unless they devote a massive amount of time, money, effort into doing so and also having good talent and equipment.
If a witch does not care and wants to kill someone, they can easily. It is difficult if not impossible the other way around. Unfortunately, most good people will be overlooked because of just a few bad ones. But since any of them have the potential, they are grouped together as being a threat. And since supression is impossible to ensure, genocide is the next best option. In other words, if you cannot solve the problem, eliminate the problem.
I guarentee the same thing would happen in our world. Fear of oppression from a source which you cannot normally contest with or restrain under normal means would drive many people to want to just eliminate the sorce as a whole so they could feel safe again.
There is no easy solution because either you eliminate one side entirely, seperate both sides permanently somehow where there is 0 chance of interference, or force the one side to become socially, economically, and politically inferior to the other (for example, slavery with a binding contract commonly shown in isekais). Since methods 2, 3, and 4 are incredibly undesirable and/or more or less impossible, all that is left is genocide.
A peaceful co-existence is only possible in small groups (like a single town or city where both sides respect it equally and are governed by their respective superiors to not harm its balance). As a whole it is impossible though, since all it would take is 1 or 2 tragities to start a devide, and all it takes is 1 person to cause a tragity. But, once that devide begins, it is almost impossible to patch it up, because the fear has already taken root in some.
Both MC and FMC are hoping for an unrealistic ideal. Their best possible outcome would be to either abandon their roles and live forever in the neutral territory, or form a powerful third party and conquer the other 2. However when they conquer the other 2, they must do so where both sides now fear them or at least respect their commands more so than they hate the other at a minimum. And while both have the individual potentials to do so, they lack the collective manpower and backings to do so. So they best desert their respective sides, leave all of it behind, cut all ties with their aquaintances who are either not their close friends, or who wont change their opinions, and just elope somewhere hidden and be done with it. Because there is no better answer where they have a happy peaceful life with eachother.