Wait, why would forfeiting to save everybody horrific deaths from sealing failures cost us political capital? If anything, this seems like it might cause the exact opposite effect, where everybody in that Swamp now personally owes us for saving them, and their Villages by extension.
A few reasons.
1) Hazou's estimation of sealing failures is artificially high due to his experiences in the woods - A village's resources to contain and deal with sealing failures are far superior to a missing-nin's. This means that while a seal may fail, it will, at worst, kill a few genin before being contained.
2) The chances of something going bad are actually fairly low - it's not how many seals are in play, it's how many seals are hit by aoe attacks - we can actually reduce this via disencentivizing violence via our current plan
The above means that the danger is not as large as Hazou thinks it is from his experiences. Additionally, let's examine other options of what might be the case:
1) The
single seal Hazou saw might be different from the other seals, meaning they don't have the same failure problems
2) It's possible that, as Hazou's specialty is not sealing failures, the person who designed this seal manipulated it such that it doesn't fail unsafely (i.e. Hazou might have messed up a sealing background check leading to errant conclusions)
So, all the above means it is likely not as bad as Hazou made it out to be. Now let's examine the political capital that needs to be burned to stop this:
To the average ninja, this (night light seals) doesn't seem like a dangerous thing, and it is difficult to demonstrate the danger. It will require trusting Jiraiya (or whomever Hazou uses) to stop the exam. The danger also cannot be well demonstrated beyond to a small subset of people (i.e. sealmasters). This means Mist will likely be able to spin the story such that Leaf and/or Hazou thought the exam was too hard and were too weak ninja to continue it. Mist will not just graciously say "oh yeah, my bad." In fact, there's a strong chance that Mist will resist attempts to stop the event until either the event is over or a sealing catastrophy occurs (in which case Hazou's warning did little to nothing, though he'll recoup the political capital spent).
Now, let's look at the benefits. There are three primary ways this plays out:
1) Hazou is incorrect about the seal danger --> we just gave up and made ourselves look like idiots
2) Hazou is correct about the seal danger
a) The event is stopped before anything too bad happens --> Mist can make fairly strong claims that the seals aren't as dangerous as others claim they are, and it will be difficult to disprove those claims safely
b) The event is stopped after something bad happens --> We gain some political capital, but Hazou fails to save lives
c) The event is not stopped and something bad happens --> We get to say "I told you so" and ninja die anyways
d) The event is not stopped and nothing bad happens --> Mist can point to the fact that nothing bad happened as proof that they weren't wrong in their decisions.
So, if Hazou is incorrect about the seal danger (which honestly, is likely given his proximity to Kagome -- see how Jiraiya is significantly less concerned about sealing failures), he loses political capital and fails to save lives. If Hazou is correct about the seal danger, he gains political capital only if something bad happens, and he saves lives only if the event is stopped before something bad happens.
Now, there are a couple things we should do to account for this new information. The most obvious is that we don't want to trigger any sealing failures ourselves. This means taking down our explosive traps, since they are the most likely to cause sealing failure. Probably replacing them with Macerators or things that are less likely to destroy the seals is a wise move, eliminating them entirely if necessary. We also want to limit the number of these things we make, since they're so expensive to infuse. As we can store them in the Pangolin realm, we can mitigate pretty much all the danger to any seals we have though, so I do think we should make them (and store them away in the Pangolin's realm). Likely, only make ~300 of them, since that's around how much we could infuse all at once in front of the proctors for scoring at the end.