Im all for sentiment against the Dragon Empire causing some effects throughout the Storm Coast. But cheap troops with no penalties is not the way to go. So I dearly hope that there is a plan in place there.
Well, I agree that you have been royally screwed over by the presence of half-price heavy III knights (and Ligoria given an excellent advantage over others). In my defence:
This is the product of two consecutive fives- the best possible result for the Coasters, the worst possible result for you.
It is a one off thing, representing all of the ill-will against the DE in Ligoria 'spent'. No more (tangible) bonuses will be forthcoming.
If Laythe fails to maintain her war against the DE, those troops may be disappointed. They will not disband the instant the war ends, but they might object strongly if peace is made which does not leave the DE beaten and out of the Coast for the next few decades.
You get free units as a matter of course. Have you sent for reinforcements yet? I can start rolling to see when and in what numbers they arrive, if that'll make you feel better.
The other nations of the Storm Coast can also (attempt to) recruit units on the cheap. Ligoria's attempts to use their anti-DE crusaders may be thwarted by other anti-DE crusaders.