I doubt that he was really prepare for a major fight.
Shrinking the fire demon to that small size and merely knocking them out (except that one fox) is a wise decision, all things considering. Their land was taken with a missing leader and enemies all around. Best to not attract a lot of attention, especially after attacking the forces that are asking them to surrender, because as soon as the Reds find out, it'll be war and those Grays will be capture if they're lucky. Heck, even I'll be temped to just kill them with no mercy after what they had done there.