Rereading Paul's post, it looks like we have to choose between fighting Varjo or the Dwarves. Varjo are probably the ones in the wrong here, but fighting them would probably damage the League of Arcadia, possibly splintering it. Otherwise, we could just defend ourselves, but I think we would just be fighting the Dwarves at that point.
While we wait for the others to post, make sure to read the rules for it is updated. There is also a description of units you have fought encountered in the RP over at the Characters Tab.