After the festival, and Thanes injury: the next time you sleep at the Tavern you will enter a difficult battle - if unprepared. Tipp. Do your thing until the late evening around 22.00 and save. Then use the bathhouse to boost your Stats and go to sleep. As you can see in the picture i started the fight with 480 HP.
After the fight, Snow will show you Axels letter. Report to Axel right away. Axel gives you his final order to infiltrate the Lizards village. Instead we pick the bloody cloth from Thane and move to the secret room inside the temple. Inside the painting we meet our Dragon Lord.
If you have the bloody cloth from thane and both Emblems you will witness the following Scene on your third visit:
Enter the painting and follow Thane without being noticed. If everything goes well, a new location will spawn on the map:
For Heros with high INT it is bascily a MUST to visit the bathhouse and boost your HP. Otherwise the Boss will potentially kill you with one Holy Fist Attack. If everything fails, a) Savescum or B) pay 2000 Gold to Chet to buy an item to respec your Hero. Change you Statpoint by leaving INT at 3.
Once you win: Congratulation. You made peace between both Tribes. You will recieve the Peace Totem from Axel and Nauxus (+3 DEF, +1 CHA) the best item in the game without corruption.