I've been thinking about this ever since playing it at GenCon, but haven't put any of my ideas into practice yet.
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Make the ambush winnable, probably just by using fewer archers. Can we lower the save DC of the poison? I'd guess not, but I'm not sure. Anyway, they brought a smaller force because they underestimated the PCs.
In the adventure, it even says that if the PCs win that encounter, their contact tells them to go infiltrate the arena. So why not have them triumph over the Red Plumes, find/glean evidence of what's going on in the arena, and then proactively do that instead of it being a contingency plan for the DM? It'd give the impression of greater player agency, even if it's their contact advising them to do it. They still found the evidence, after all. The arena's heavily guarded, so the easiest way for a bunch of non-humans (probably) to get in is as prisoners. Maybe one PC could pose as a slaver, selling them all to Mags at the gates of Hillsfar, but that presupposes that there's a human PC able to pull off that kind of deception. Faction contacts would probably be a better solution.
But, like, do it closer to Hillsfar. Hopefully this lets us skip the dull prison-wagon ride, and the bit about being exhausted then not exhausted, and watching the Red Plumes bare-knuckle fight each other for whatever reason. They're stricken by the madness too, I guess, but IMO the foreshadowing just isn't strong enough for it to resonate with the riot at the arena.
I am well aware that the wagon ride is an opportunity to roleplay. I get that. My problem with it is that none of it means anything. The text doesn't make allowances for you to, say, defeat all the Red Plumes and commandeer the caravan. I also get that "a good DM could improvise that," but that's exactly what we're talking about here -- ways to improve the scenario above and beyond what it already includes.
Make Deriel less pathetic. Maybe even not pathetic at all! I think she'd make a more compelling NPC if she were more competent and determined. Instead of being a quivering mess in the arena, she could, y'know, contribute! Her rapier +1 is in among everyone else's equipment; she gives it to someone at the end. If she must die, maybe she could die doing something heroic instead of, y'know, leaping to a watery, quippery grave.
Have some of the "bad guy" halflings be the Tinfellows, so the PCs' stated objective is right in front of them instead of in what's essentially a cut scene that takes place in the adventure's denoument. It gives the fight some stakes and might even encourage the PCs to try to "win" the arena game instead of just murdering halflings. How do they recognize them? Maybe they spend the night in the cells below the arena, and the Tinfellows are locked up nearby, and they get to talking. The Tinfellows could even fill them in on the arena fight to come and give them the idea that that might be their best time to make a break for it -- when they're all armed and able to move freely. One of the other things that annoys me about this adventure is that it kinda doesn't matter what the PCs do -- the fight ends with the crowd riots, and that's that. So make this part of the escape plan. The PCs hear that the crowds have been getting really rowdy lately, so much so that the guards can barely contain them. If the guards are preoccupied with policing the crowd instead of the prisoners, escaping would be that much easier.
Related: When I played this, I wanted to take shots at Mags. Hey, I had a longbow, and she was well within range. My DM shut that idea down really ham-fistedly -- basically, "She has archers with her, and they'd fire back at you, so you don't want to do that." So I'd formalize that. Give her some guards, give them some bows, but let the PCs target her if they can. The crowd doesn't like it when the guards fire back (they want to see the prisoners killed by each other, not by guards!), so it increases their frenzy meter or whatever it's called.
I like the arena fight, but it feels really shoehorned in to me -- as if the author were really in love with it (with good reason -- it's a fun, interesting fight, on the face of it) and just wanted it to happen no matter what. If it were presented as a solution to a problem instead of a problem in and of itself, it'd feel a lot different to me.
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