I look at the fanaticism a bit differently. There are in fact demon cultists all over the place (witch hunts look different when witches are real) and he had an incident where not being sufficiently suspicious of a group of refugees led to a massacre. I think it was intended as a tragic outcome of the war on demons and him staying in his job past the point where he’d started to crack rather than just playing to trope. The unending war grinding people down is something of a recurring theme. It’s not like they don’t show us a more positive view of the man when you arrive wounded at the festival - he tries healing you, upon failing correctly sends someone to fetch Terendelev, and none of the dialog options I’ve chosen have him treating you like a spy. The junior Desnites did behave suspiciously (both in their initial “tampering” with the wardstone and fleeing - right or wrong cops will always view that as suspicious), their explanation of what they were doing would be borderline incomprehensible to a lawful person, and Ramien is attempting to shield them. I don’t disagree that the quest could do with a bit of rewriting (the fourth attempt is the first time I haven’t had to kill the man) and I’d like a few more positive examples of conventional crusaders than we have, but I don’t think this is a straightforward case of stereotyping.
I also don’t think distracting him with the reference to what Irabeth is doing is “gaming” the quest. You are letting him know that things are happening in his absence that are more important than either his feud with Ramien or his vigil over the chasm. He deprioritizes his purge, Ramien agrees to leave town after it is liberated, that seems like a reasonable outcome of the quest. If his second in command (who is still sharp) was around and a meeting could be arranged between the second in command and the Desnites and the second in command convinces Hulrun that they’re just good kids who behaved foolishly and spanking them (rather than hanging them) can wait until after the real problem is resolved, that would also be satisfactory. Unless there was an invisible demon nearby clouding his mind with a barrage of telepathic suggestions (which would explain his fixation on guarding the chasm which is far less explicable than his attitude towards the Desnites), I’m not sure “cast a spell to resolve the situation” (which in this case would be protection from evil on him or glitterdust to reveal the demon) would not feel cheap. Another option they should maybe offer is some kind of deal where they surrender peacefully, and he doesn’t do anything to them until the larger situation is resolved and their questioning and trial (if any) is handled by someone else.
My only major issue (other than how deeply buried the answer is beneath conversation options you have no reason to revisit) is that after he goes to the Defenders’ Heart, he shouldn’t be with the inquisitors who come for the third Desnite and with him not present, they should be easier to talk down.