The standoff that has formed is actually not surprising.
When the Imperial Guard Battalion is about to be annihilated, the Empire will absolutely choose to use nuclear weapons to sweep the ground. Otherwise, even if the Imperial Guard Battalion's desperate counterattack causes the three Independent Groups to lose more than half of their forces, the Empire still has no ability to recover the three hundred Duke Mechas of the Imperial Guard Battalion.
This is a strategic-level resource that the Empire will never, under any circumstances, allow the Federation to capture.
The same goes the other way around.
If Ji Xinghe's tactical plan fails, and the Peace Space Battleship fails to hammer ninety-seven Duke Mechas into the ground, thus creating an opportunity for Ji Xinghe leading the Xinghe Squad, an opportunity for the three Independent Groups, an opportunity for the current standoff situation.