First off, they're giving in:
"give you gnome paladins just to put a stop to your relentless requests for them."
However they are likely to follow a similar 'evil' path as the Blood Knights, at least initially, as indicated by these straightforward statements:
"Gnomes are evil."
"Cute does not equal good."
And in response to "They are creatures...of destruction" the response was a clear "Exactly."