I think the humans will win the war unless you give the trumpet to the elf king (elves win) or to the arbiter (you win). This has nothing to do with the tapestry. The tapestry thing happens later if you have accepted the wand from Mr M, it doesn't matter if you give the trumpet to the arbiter.

I don't know why the banners in castle Harmondale changes from red to blue, but it is kreegan annoying, and it always happens.