The young Knight is actually behaving as I thought she might.
She seemed a decent human being, someone who would actually qualify as a Holy Knight for a benevolent deity.
Which supports the argument that the upper clergy is not, in fact, presenting their deity's wishes, but rather their own in regard to their secular policies.
She has still bought into the church's doctrine of the intrinsic evil of magic outside of their control.
Magic under their control would be presented as divine blessings, miracles of the deity, etc., so it's likely she isn't aware of that portion of their hypocrisy.
Next chapter should be interesting; he'd been restraining himself so as to not upset Nephie, that argument just went out the airlock.
As, she is already very upset... with those in conflict with them.
However, provided he knows the proper spell, he does have an option other than killing the young knight; make a slave of her.
I know, it's also a very overused trope, but that's partially because it really is a solution in these types of cases.