The point s that this wouldn't have come about if you didn't want it too, you could have focussed your efforts into attacking GO/DRZ long ago had you wished. Mercs have long non-committal to these wars, this turn comes as no surprise to me. You turn your back on the beast to hit the dog.
The problem was that nobody wanted kinngrimm in that area and I remember a little scandal about that situation, as kinngrimm was the ally of Templars while you didn't want him close to you neither. As you remember, Mercs were fighting UIF at 2 fronts. And unlike Crusader Alliance or Coalition, we also had a lot of
possible enemies close to us, like Wolves, Cotgs, Independent factions (Olwen and all the others). Nords got defeated and Mercs got their town, a lot of UIF fiefs got destroyed and are now owned by us. There was a long period when we didn't do anything because we simply had too many fiefs and couldn't use our forces to attack as we would leave fiefs empty.
Kapikulu's aggression is unexpected so there is nothing we can do. You saw how CFA acted towards us, so they wanted this war and now they have to face consequences of it.