Two Things

[Elwin]

Mehgard is required in story line, or was it a side quest to close deamon gate??

About fairys: I have used various tactics with them. If u dont have timeback you should mostly do wait on their turn, so they will be last, then you hit with them and after tht there is another round and (wth angas ruby )they are first so you can go back safely. Shortly : play hit and run.
Or with timeback you can just rush with them, phantom spell is also good idea, most of the units will atack phantom first.

When i played both lake fairy and sprite i combined both strats. One rushing with timeback and phantom and second doing hit and run