(SPOILER WARNING)

All of the hints/cheat sheets that I've seen involve getting into
huge battles with the giants and the salamanders. But you don't
have to fight either. First, get the salamanders to take you to
their leader. Imply that you're from his boss. Go visit the slaves,
then come back and get the key from the boss. Release the slaves.
Follow them through the door to a minor battle, and you're set (this
can be much better than fighting like 20 salamanders and 10 winter
wolves.)

Next, go to the giant Jorin, and get his badge. Free the slaves
by killing the wyrms and then the one giant. Exit through the
tiny cubbyhole to the right and you won't have to deal with
seven angry giants or so.

Now, it's debatable whether or not this technique is a good idea,
because you get experience by killing all those salamanders and
giants, but still.

Felix

Sure, you lose the experience, but you also miss out on the TON of magical items the giants are holding, especially Joril. There's some nifty stuff to be had.

Well, you can get alot of the giants' magical stuff that they leave scattered around under piles of crap... and they don't care if you take it.

The ice salamanders, on the other hand, don't take kindly to you releasing the slaves, and if you go back up there, they attack you. You don't have to go back up there, you can just leave with the slaves, but if you don't go up there then you never get to tell the leader of the slaves (I forget her name) that they are free, which gives you some more experience points.

I didn't have much trouble wasting the salamanders OR the giants, so I'd much rather kill 'em all than let them continue to befoul the Dales!