They weren't wiped out the face of the Earth, as there is still hate towards people with no mana is probable everyone involved lived good lives, the king at the time failed in his attempt to change things, he could have executed or dropped everything, recognizing he should have done things on a more personal way with better subordinates.
The princess guilt makes sense, because she have a perfect life when her family that ruled didn't do much for the people, but her grandfather seems clean, as he inherited a broken system, her gran-grandfather was probabyl the last royal guilty of that shit.
I hate this whole arc with MC going in a foreign country with a random bitch he doesn't know hunting for dragons, he have money, he have close friends, he is keepign a dragon, not killing them so it makes zero sense for him to jump on that ride, I know he is in part retarded, but this was too much.