Method of creation doesn't matter. Appearance doesn't matter. Sapience and Free Will matter.
If the Redcap has both, then he is evil and all redcaps are evil and we're in the same "All of a race is evil" boat all over, again. And the one example in the castle just makes it all the worse because it shows they get a choice and all choose evil but one. In which case the OP is right and it's just a problem waiting to happen. Though less of one because as I previously noted the Redcap has no cultural trappings or examples of "Peopleness" such as families, jobs, or societies. They're just murderhobos, the lot of 'em.
As to redemption... It doesn't matter.
Morality isn't "They could be better, tomorrow, than they are, today, so I must let them kill me, now, to avoid depriving them of the chance!"
Are you in danger? If yes, fight back. Kill if you have to. There's no big conundrum, there. The issue you're presenting lies earlier: The choice to travel to the dungeon and get that treasure no matter how many orc lives it costs. At -that- moment you've made the choice, and everything that flows from it is consequence.
Are you doing it because that treasure is needed to save the world/kingdom/village? Or are you doing it to enrich yourself?