What I find most interesting is the way the kobold was talking- he called the LG "scoundrels" and said he'd normally never stoop to working with such as them.
Could it be Rich went and used the "paladin as Belkar's opposite" idea on us even without Miko, sneaking it in under the radar by making the character a kobold? Read his dialogue again in this light and see if you don't agree. I wouldn't be the least bit surprised if this kobold character survives the adventurer attack somehow (next on Fox: "When Adventurers ATTACK!") and shows up again later in the plot.