Original Message:   Here's are your options...(Spoilers)
When you do the fake out, you more or less keep Harmondale neutral. By the same token, if you clean out both dungeons and complete the actual quests you will also maintain Nuetrality for Harmondale.

If, however, you rescue the spy for Queen Catherine, then fake out the Elves, you'll be under Earthia's banner, and vice versa if you help the elves and betray the queen.

The banners will show in your throne room after the quests are complete.

You won't "alienate" anyone in the sense that one side or the other will attack you for entering their territory, if that's what you mean. You can still travel back and forth between Erathia and Tularea with a certain amount of diplomatic immunity no matter what choice you make in these quests.

Just know that the cave in Tularea is quite a challenge so make certain you're up to the task.

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