I see only one problem, the drow don't have a clue how strong the party is. So why risk taking them on without knowing how strong they are? Why not let them have their encounter with the hydra, let the drow help (a bit, nothing to strong). I'm sure the drow will be happy to have another threat removed, not to mention the loot the hydra would have. At the same time the drow priestess has time to gauge the strengths (and weaknesses) of the party, not to mention the resources they have to expend to defeat the hydra. If they are to strong the drow priestess feigns "I was so sure the Hydra had the token", if they are not to strong the priestess offers them death or slavery (if they surrender without a fight all the better for the drow). This way the choice of slavery or death belongs to the characters/players and drives home their own 'stupidity' a bit more solid. The paladin should remain unharmed until the priestess decides wether or not she can 'take them', if she decides to 'take them on' then she would show up enforce on the paladin's doorstep stating "your friends surrendered peacefully, i would advice you do the same" (whether or not they surrendered).
btw. I don't think they are 'stupid' to try to negotiate with drow, maybe a bit naive to trust drow.