We were doing absolutely fine until someone told Overlord Humans are capable of changing their Capital
I thought that was weird, personally. It feels like Overlord just admitted he was meta-gaming. I liked it better when I could operate under the assumption that he was going after capitals as the most visible symbols of a realm's power in order to crush our spirits.
That said, I contend that we're still doing fine. I guess we can't count on them focusing in on exclusively on capitals anymore, but we've effectively destroyed 4 out of 5 armies of Horrors, and I'm reasonably confident that Riombara can now defeat Midnight of the South. Unless Overlord pulls out more armies of Horrors or some other nasty trick, it looks like we've managed to ride out the worst of the storm (though not without losses).