Hopefully, the road will be re-designed to avoid a simple straight meeting point in the middle of the village. There is that meandering stream or river, so the road that crosses the river upstream should do so miles away. That's because anyone traveling that road with animals (horse, wagon-pullng oxen, etc) will water their animals at the river. If the animals poop or piss in the water, it will be polluted. There needs to be enough time and distance for self-cleaning to occur in that river before that water reaches the village. So the road should either cross the river far away, or it crosses close to the village but downstream from the village so that no polluted water reaches the village.
As for the Oni-folk getting about half of the land to do as they will, they still cannot form their own formal country. They are the administrators of the land under Duke Dias. If they created their own country, that would be secession from the Kingdom which is clearly illegal without approval of the King and probably some grand council meeting of the Kingdom's "Peers of the Realm". That's because the Netross Grasslands is the territory of the Kingdom after a war with the Oni. For the Oni to simply take it back would not only be a loss of Kingdom taxable land, but it is also a humiliating insult to the dignity of any Kingdom. No country simply allows enemy or former enemy to simply take away the nation's land. But maybe the author doesn't really care about such things.