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He didn't want to be under their rule because he felt that they were naïve and not prepared for imminent attacks , he didn't want to comply and allow his people to become victims of the naïve attitude of the towns folks, but he also couldn't lead them out, he had no choice. His attitude was they are not leaving and going back out there, but he was not going to allow the townspeople to just make them behave under some everything is alright in the world bullshyt either. So if they had to take it by force he would, not because he wanted the power, because he didn't want to go back outside the walls. And you're right he has become arrogant and forgot the cardinal rule of survival.
As far as things not getting bad, I would say everything that has happen was bound to happen sooner or later, and while he planned poorly he was on the money for pretty much every decision he made.