Greetings!
Lela! Nice to hear from you! It's been a while since I have seen you! Elementary School, eh? Keep up the good work! Thanks, I'm not a politician! I'm glad that I made you think! I have been told by more than one friend that I should attend Law School though!
Well, as for killing the Druid character, there may in fact be other details as to why the character is holding back, not fighting, and so on. I however, wasn't supplied with such information that explained to the contrary. Thus, from what I read, it seemed like a cowardly character.
Keep in mind, friends, that there can be very different motivations for a *character*, as opposed to a *player*. I'm never in favour of tolerating rude and obnoxious players that desire to ruin another player's fun gaming in the campaign. Please, understand that, ok!
Now, having said that, the folks that I usually game with currently, and in the past, have tended to be all active duty Marines, or veterans of other branches of the military. In addition, the civilians that aren't veterans have been hanging around with the rest of us for so long that the culture has rubbed off on 'em.

Thus, they are very up-front in their attitudes towards any character that displays cowardice, treason, or thievery and sliminess in general. Such characters--played by players who willingly choose to play them in such manner--are under no illusions about the ever-present danger their character is in, in such circumstances, should such be discovered or cowardly or suspicious behavior observed. Judgement by one's comrades while in the field is often rough, quick, and fatal.
Of course, the same crew is fanatically loyal to someone that they believe to be honorable, loyal, and an all-around hard-charger.*
*HARD-CHARGER--Someone who is Gung-Ho, motivated, enthusiastic, encouraging, disciplined, and otherwise self-sacrificing. Someone who puts the team above his own personal safety, or gain usually regardless of the circumstances.
Continuing, if such a character seemed cowardly on an odd occurance, like many have said, the character would probably be warned to get with the program, or get lost. Failing that, the cowardly character would be deep-sixed fast. If the character seemed to develop a pattern, as I assumed from the reading, well, someone in the group my just say enough is enough, and execute the character in some dramatic manner. This would probably be done in a serious, righteous attitude, but pointedly ruthless and tongue-in-cheek for the character being executed. After all, they'd say, we warned you about being a coward on us. and so on. It would be over quick, and as I said, the *player* would be under no illusions about what type of behavior or attitudes to beware of. Consistent cowardice, or *Malingering* as we sometimes call it, just isn't looked upon with tolerance, or mercy.
As for the Hobgoblin "children"--as Elder Basilisk mentioned, if such creatures are free moral agents, then they should be accorded all rights and priviledges that Humans or any other "sentient" race is accorded. I explained why I didn't think that they merited "Free moral agency" and why I didn't think that Hobgoblins were morally equivalent with Humans.
Furthermore, this is something that I don't quite understand. Some DM's insist that the player-characters embrace some all-tolerant, all-merciful behavior in the wilderness, under combat conditions, towards creatures that are widely known--to be vicious, evil, savage monsters.
The strange thing is, at least by implication from the rules and such, unless one's campaign is *very* different, the towns and cities that the player-characters come from, themselves, would never en masse, treat such savage evil humanoids with the honey-sweet concern that some insist on. No, the town or city would annihilate the humanoids before they got within a hundred feet of the city walls. Anything that survived the ballista, catapult, and archer fire, would be swiftly trampled and hacked by a squad of armoured horsemen. There would be in all probability, no negotiations, to hand-wringing, no hesitation. The city or town would probably never exert such concern as to organize elaborate parleys so as to discern the alignment of the evil humanoids, and go through a bunch of effort to determine what they want, what the humanoids feel, or anything else. On occasion, of course, some parley might take place. But the vast majority of the time?--It would be routine I'm sure to annihilate them as wicked raiders before they so much as said hello.
Should the creatures somehow infiltrate the city in disguise, and reveal themselves somehow, well, the hue and cry would be swift, and if the Watch didn't cut them down first, the townspeople themselves would probably get a rope and hang 'em high! And even if the evil humanoids protested their innocence, it seems that most people would assume they were lying, or using magic to somehow trick the humans, or defeat their Good magic by some foul and cunning sorcery or witchcraft. Either way, any humanoids caught in a city would certainly not be afforded any such compassion and mercy. Far from it! They would, if they survived somehow avoiding hanging, or being burned at the stake, or being cut down where they stood in the street, they would probably be hauled off in chains to some dark dungeon and tortured to learn all that they know. They would be stretched on the wrack, burned with glowing pokers, their flesh torn by the pinchers, and their skin flayed from their back by the scourge, encouraging them to tell all that they knew.
That is what I see as being the standard response and treatment to such vicious creatures found near or within the walls of a civilized city or town. I just don't see the population at large, the terrified masses, or the suspicious, vengeful authorities, as being that concerned with the "rights" or "feelings" of such evil humanoids as many DM's seem to expect the player-characters to demonstrate.
Semper Fidelis,
SHARK