Haven't read ahead yet but if I'm in MC's shoes here I'm taking that daughter to Gandizire just to get her away from her deranged sociopathic mother. Using your own child as a tool is disgusting enough without treating their life as a trading token.
The MC accepting the alliance is, IMO, not a misplay here - provided he realizes that the queen offering her daughter's life is the mark of someone batshit insane, completely unable to be trusted, and with no regard for the value of life. They didn't hash out any treaty details, after all.