A head count reveals that a surprising number of Anuireans have survived; probably thanks to their toughness and discipline. When the gnolls attacked, these men did not panic, but gathered togetehr and formed defensive lines. Gnolls are mean lean killing machines, but when faced with heavily armored and disciplined formations neither their archers nor individual ferocity count for much. The Obsidian shards killed quite a few and injured many more, but by and large you've not done too badly...and Lady Faieme is the only person of importance to be badly injured/dead (Btw: Maire is renowned for her healing powers - she even reattached Duke Hiriele's arm if the bards are to be believed).
OOC: The above text might as well have been added by one of the players; it doesn't really change anything. If the DM REALL wants to kill all the nameless guardsmen, he can devise a thousand ways to do so - later.
The Governor is right; the loss of supplies is your biggest concern. You have a large party of men and all the animals and supplies were lost to the gnolls. Now, the Shadow World doesn't look too hostile in this area, more like a shadowy version of the Daylight forest. Captain Oeberon and his men scout about a bit, and return with directions to a small stream that turns out to hold pure, drinkable water. He's also fairly confident that he and his men can find some game and edible plants/fruits/whatever.
OOC: One of you could also have written this; The Governor pointed out an obstacle (very good!) but one of the other players could easily have come up with this solution. If I had wanted, I could have limited the amount of water found, made it poisonous, or simply ensured that you lost it later or whatever...