"When I contemplate harsher enforcement of the law in Westcrown, I find myself thinking about Molthune, and the civil war. The Lord-Protector had a problem with a few hundred rebellious subjects. Following much the same approach being recommended here, he rounded them up and hanged the lot; When this inspired more to rebellion he hanged them too. I imagine he thought that eventually he would have caught and killed every troublemaker, and there would be peace. I am sure he did not imagine that he was being cruel, or unjust, merely enforcing the law that existed. But the people around Nirmathas certainly disagreed! No one has ever swept a city looking for a thousand traitors and not committed a thousand injustices in the doing. Yes, with enough magic you may find all the guilty parties, but I doubt you will not also catch a hundred innocent men, and a hundred more who are guilty only of minor crimes that would merit a lesser sentence any other day. And each of those is another incident that will teach the people of Westcrown that the government is unreliable and unpredictable, that the crown and the nobility care little for their lives and hate them and want them to suffer and die. And even those rightfully convicted will leave the people with less to lose. A man whose wife is beheaded for throwing a torch is likely to rebel himself; a child orphaned by the final blade will take up a sword himself. The Lord-Protector started with a problem of a few thousand rebels, and now a third of the country is in insurrection, to say nothing of present company.
If I understand correctly, your question is about how a Lawful Good state balances the obvious benefits to public order of a harsh response to crime with the moral obligation to mercy. In fact, we think that question is wrongly-framed. A maximally harsh and merciless response to crime does not, usually, promote order. It's been tried, again and again, and I've never known it to work because people will learn to hate you faster than they learn to fear you. Valia Wain rebelled in Pezzack, when she knew that her whole family would be sentenced to be tortured to death for it, that she'd be maledicted to Hell if caught - does anyone here imagine they could threaten a punishment that would scare her? Our aim is to maintain order in the city. The situation is very dangerous and I'm sure very frightening, and I do not find myself strongly moved to prioritize mercy above order, beyond steps like not sending people to Hell when that can be avoided. You ask me, 'To win peace, would you condone torturing four thousand men to death?' but I think my question for you is, 'To win peace, would you forgive them?'"