Ok, I understand that this should be a lot for the MC to take in, but his 'decision' shouldn't be that hard.
Shiramine shouldn't be struggling with the idea to genocide the demihumans.
What's done is done - the demihumans are here, they're part of the planet's population, it's ecosystem, they have so much in common with humans - heck, they can even conceive children with each other!
Cohabitation, FTW, though I would expect it to some time to set in.
There's no justifiable reason to completely wipe out one side or the other, not that I expected Shiramine to want to wipe out his fellow humans, even though the vast majority of the ones portrayed in this timeline so far are fucked up in the head something fierce...
Humans are almost always the greater evil in these stories...
Highly doubt Diedhauser revealed everything to Shiramine, after all the shit that dude has pulled off, along with the fact how much control he has with the spread of information.