I really don't like any option that leaves the Fates alive. Let's not forget that we are talking about the beings that designed each and every magic system that this world, and we ourselves, use. They might be weaker than us right now, but if we keep them around for torture or "justice", who is to say that they cannot use the time we give them to rise above their current station? It seems like the only reason they failed to prevent our rise is because of their stupid limitations on interacting with the world, which seem to stem mostly from internecine strife as well as their overbearing arrogance and sloth.
The heroine is a member of the Fates, and it was planned for her to handily become more powerful than Zang Kong is right now, so it seems likely that she would have managed to surpass the current power-limits of the Fates. The Fates thus have all the tools they need to become stronger and stronger if only we give them time. By dealing them a grievous, but recoverable injury, we force them to cast of their limitations, arrogance and laziness. And Nameless is very much guilty of those same sins, which could be used to make him overlook the rise in power of an opponent he thought conquered.
Machiavelli says to never do an enemy a small injury, so Mercy or Further Beyond Vengeance are the only possible answers to this vote for me. And even FB Vengeance makes me uneasy, because a future enemy could free the fates from their infinity stones and use them against us.