No Love, just Death for the poor humans here in this forum.
I know I'm just asking for trouble, as their are tooooo many far toooo weakminded do-gooder heros out there. But remember: In most cases it isn't the MC's fault, when an isekai story sucks. It's the author's. So: I don't believe the MC should slaughter that town in cold blood.
Wait,wait,wait...
I don't cry too much about the deaths of those scumbags. They destroyed countless lives and made a living out of it. They resisted the MC by trying to use lethal force against him and they gave orders to kill him, intruder or not. MC was looking for his friend and got attacked. That's all there is to know about that. As for the "official" ways to handle this situation, he knew where she was (kind of), she was in imminent danger as far as he knew, the town guards wouldn't have listened to him anyways and if they would have, chances are they would have delayed everything, as they are either corrupt or incompetent. There is a slave trading gang, that's doing business bigtime. They have to be either the first or the second. Either that or slavery is even legal. No matter what, but that rat's nest of town, that doesn't get its shit done, managed to incur the wrath of a demon and a flock of dragons. So far, so good.
But now he was retrieved the victim, has the upper hand, isn't facing the slave traders anymore (I think he isn't), but guardsman and people... It's time to make demands to the town and threaten them (and this town earned a good, vicious threat)... and not slaughter people, who might not even have known, what those slaver traders did and only want to protect their families...the same thing, he just did seconds ago.
Just saying...