This was just a riddiculous attempt of being spitefull. By doing this Melhed has guaranteed 2 pissed off neighbour at the cost of 1-2 months tax-income. Due to the treaty there would have been no war with Melhed from any of these realms for much longer than such. So, they have not really made the "enemy" weaker, just delayed their ability to make war, which has minimum effect to anything.
The other choice, to leave the regions unharmed, would have granted them two peacefull neighbours and chances of really good relations to Ar Agyr in the long term. This would have put some danger to Melhed sure. But, if we wanted to kill Melhed, we would already have done it. So, we actually
dont want to kill Melhed, but they are doing all they can to provoke it.
And well yes, it might be harsh demands to request intact and fully functional duchy, but it was either that or all of Melhed. We were generous!