Original idea by Ramon Dozol:
After the constant destruction of the forest and killing of animals and fey a powerful druid started a war against the city. He put a dirt and stone dam on the river, and water is quickly building up.
Killing the druid wont stop the Dam from filling up, or eventually breaking and destroying the city, killing a lot of people.
If tried to reason with, the druid will stop it with one condition. Everyone in the town must move away, and never come back.
Details by The Encounter Guy:
So the big thing with scenarios like this is setting sympathy and seeing both sides perspective. This is a moral dilemma for the group. The truth is there is no RIGHT answer.
I would set goals/deal breakers for each side kind of like you have.
The druid is willing to stop the war, but only if the people leave.
The people of the city need what the forest provides to live and thrive. And it is their right to it and will threaten to get the local lord involved. Its a fight the forest cannot win.
In scenarios like this I don't know a predicted outcome. Sure they may be “set in their ways.” But what if the players come up with an amazing way to bring them together. Perhaps instead of stealing from the forest, they find a way to live in harmony. Perhaps they can find common ground to work together. I don't know exactly what that looks like. But if your players come up with a solution that sounds plausible and fair, at least let them attempt it.
Imagine the engagement in your world if the players hear about a local town who is quite strange. They seem to live in symbiosis with the forest. Building homes that seem to sprout from the earth with beautiful foliage year round. They export a rare fruit that only can be found in that forest, and defend it and the forests secrets diligently.
That's really cool because it shows the parties direct impact on the world. Maybe they see these fruits in a foreign market 10 sessions later!
Either way it goes, there should be some guilt involved in the aftermath. Perhaps a session or two later the party learns how the city accidently burned the whole forest down after defeating the druid. Or perhaps the residents of the city left, but could not make it on the road and were mostly slain. Those who survived were left with noting and beg on the streets.
Monster recommendations:
Level 1-4: Druid, Badger, Deer, Giant Rat/Badger (flavored as Beaver), Giant Weasel, Boar, Elk, Giant Badger, Wolf, Black/Brown Bear, Guard, Soldier, Bandit, etc.
Level 5-10: Druid of the old ways, Archdruid (CR12), Master Thief