She is being surprisingly lenient here, since she was supposed to punish them for bending the rules, the original problem would probably have been this same thing but with 2 lives vs 1, instead of 3 vs 1.
Ironically, their bending of the rules in the previous problem was turned against them by technically sacrificing one innocent life for the life of a bully.
Also gotta love the sorta reference to western mythology of meeting the devil at the end of the crossroads to strike a bargain.