Eveam is not widely known just as most kings were not widely known within their own kingdom, because citizens didn't really had the freedom to travel abroad and news took forever to reach anywhere actually. Anyway, this is a case of knowing the ruler but not knowing how he or she looks like, moreover Avoros loyalists still exist, but they are scum and minority so they don't get the luxury of being in the same cathegory here. Anyway Eveam is extremely capable and has been keeping the Gabranth(the beastmen) away from Evila(demon) territory for a very long time ever since she became the Demon Lord, she is also perfectly capable of dealing with economic and political problems. Her only weakness is also her main strength. She willingly prefers to put her trust on people, and no she doesn't do it because she's a naive idiot, despite waht the majority of superficial readers, will tell you.
Her mindset is this, everyone is innocent until proven contrary, she prefers to find solutions instead of just being a lazy coward who's easily supicious of anyone and everyone, because it's safer and easier.
That's why she'll choose the harder options but with bigger payoff.
Also be reminded that her country was originally the one who made the other two countries look at the Evila as merciless demons who wouldn't be above any tactic no matter how cowardly and scummy it was. This is by far the biggest reason for these peace talks, Avoros disgusting tactics left her with no choice but to put herself into an unfavorable position in order to have a chance at peace, if she didn't do that she'd have to wage war and pacify the other two coutries by force, which completely defeats the purpose of making amends, cleaning up the image of the Evila, and bringing peace to the world.
That said, the reason why her plans failed was not because she was too naive and trusted traitors:
1- None of the military, be it members or former members of Cruel had any history with suspicious behaviors or seemed to be aligned with Avoro's supremacist politics.
2- Evila really don't care about who is in charge they care about results and power. Although the first Ruler and first ruler of Evila is widely known, loved and respected.
3 - There is an unknown factor to literally any of the three great countries, that influenced the outcome and the main reason behind the betrayal
4 - The Human king was well known to put his people over his own emotions, as you can see in the surprised and horrified faces of his subjects and friend when he betrayed the peace talks with a cowardly tactic of his own. The Human King was never a schemer, and unlike what the readers with the vantage point of seeing the things that would originally be hidden from prying eyes usually say.
The king's lies were not obvious because most of his arguments about Evila were true as it came from the Evila during the former war agaisnt Demon Lord Avoros, a race that betrayed peace talks to murder officials, backstabbed promises, used the most heinous of tactics to obtain victory.
Also Hiiro ended up being right but his choices came from him being selfish, more importantly he saw Lilith's expression of guilt over summoning them which further helped him stay away, and not because he properly knew he was being lied to.
Readers usually think that he knew exactly what was happening but he didn't, the situation could've easily gone against him as he was working on assumption, if it turned out that the Demons were indeed as vicious as the rumors, he'd be safe because he can transform, but he would end up being dragged into the war by force or even be arrested by not complying to orders, or worse.
5- Xaos is effectively isolated from the other 2 countries, that's why little is known about Eveam, which makes the King's lies go unnoticed, because no one can prove that he is wrong, when they have only info about the times when Xaos was a country of villains, and more importantly no one can even suspect that he is lying because he is currently going againt his own nature, the guy is betraying himself first and foremost, it's literally impossible for anyone, but the people involved in his plan, to know that he is planning on sacrificing the heroes in order to use their deaths to promote total war on the Evila.
It's not a matter of being smart, it's not a matter of everyone being naive. The king suddenly changed and has been acting behind the scenes. Not even the Princesses are involved in his plans and know about this behavior of his. Lilith will faint when she hears from Vale about what the king did during the conference this is how much of a madman he had become after the last war.