You have a few options when fighting the two groups of demons.
The Tanaar'ri are harder than the Baatezu on account of their magical abilities. But you can chose which side you want to help, or neither and kill both groups.
I was still able to beat the Tanaar'ri and hand over the leader's heart to the Baatezu leader. I did not do much magic when I encountered them. I just threw myself(ranger dual weilding with that nice new demon killing sword), and Sarevok(Silver Sword) into a sprint for the two ugliest ones there, while my weak people shot bullets and arrows.
Mazzy jumped in the melee with her new short sword that has a 15% entanglement capability. Those three basically wiped out the entire Tanaar'ri group with the back-up of those +3 bullets and the short bow of Gesen.
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Loyal guardian of the
OHF
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Ironworks
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(the fool that takes the bullet)
Ertai's back-up
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Cloudposter