Is it possible to take Baldus's item and the Muddy Dud without losing any units? Also, at what point do the characters decide to retreat? I can't seem to trigger that scene without losing a ton of morale and a unit or two.
It is *possible* without the death of a character. Before you reach the flags, let the knights attack Rosary (union if you like) and use dollcraft against Baldus(!). Kill the knights(bridges) with earthquake and Yggdra+golem.