Since Illyria really doesn't take a side or has any reason to fight for the city, that's definitely doable. The only one who can maybe sway her one way or the other is Spike, if he's in the mix of things. But even so, if it serves her purpose, whatever that is, a deal is definitely doable. And disastrous.

Also Baby prisons! CUTE! There would most definitely be an immense amount of bitching on Gwen's part. Of the: "THAT'S IT. No more good Samaritan bullshit for me!" variety.