If we let someone survive, I expect the village to be reasonable (e.g., recognize that the killing that happened was self-defense and that we exercised mercy in sparing anyone) assuming we can play stupid enough about the 'finish the job' comment, which I interpret them as thinking that Jiraiya came out to wipe them out.
I don't think it's really likely to work out like this. Ultimately we were attacked because we showed up unannounced and started skulking around their territory, with a cover story they found genuinely laughable even before noticing our scrolls. That's already a really bad impression right from the start. And then, like, the people we're fighting here are probably beloved back home, not just people with families who love them but exemplars, comrades in arms.
If I was more emotional than logical, I would have trouble seeing these outsiders who killed my comrades as anything other than malicious. If I was more logical than emotional, I would have trouble seeing these outsiders sneaking around our land with an unbelievable cover story as anything other than malicious. Different flavours of malicious, for different reasons, but I don't see a single person in Neck thinking we aren't the bad guys.
Of course, if there's a matter of pragmatism pressuring the leaders to play nice we might still profit off of that, but we did in fact come here with nefarious motives (to take the Squirrel Scroll for ourselves) and they don't gain anything essential by playing nice. Heck, if they can successfully form a strike team capable of killing us,
they get to take
our scrolls.
I'm turning the situation over every which way in my head, but I can't think of a way this turns out in our favour.