Choice one: I don't think proclaiming her a heretic is good, especially not shaking things up. I could see this as a good thing almost for the fact that the High Priestess is hopefully not corrupted by the seed as Kathleen is, but it might still be too heavy handed. On top of that, because of the corruption I don't think it's smart to bring to bear any visions that she has any heed. I think remaining with the status quo would be the best, though I believe the next choice should shake said status quo up. As such, I'm choosing B for the first question.
Choice two: Times are tough, and this corruption is untenable. Letting it fester and grow is not acceptable, as it just in the last scene clearly takes hold of her during important meetings, and it has yet to even grow worse. And, since the enemy are more than happy to enslave and take advantage of the people of Kiree, I don't think having a leader who - at inopportune times - will listen to her lust over reason is a good choice. The unorthodox may be necessary in such times. If these were once part of religious texts, they may very well have been needed or been a tactic at one point in time. This could act as an inoculation and defense against the demon's corruption, and if it proves to work well for the queen, it may be important for the others who had been a part of the orgy. I'm choosing C for the second question.
Choice three: This choice only has one answer for me, and I don't like it. Arkoroni Inquisitors making the choice is sure to make the 1/7 that the princess goes a 7/7 chance with how the prince was beforehand. Not to mention, the shady back-alley deals are a temporary fix that is more akin to a timebomb if it ever comes to light. Letting the inquisitors choose is surrender in all but direct fealty, and giving the shadier parts of Kiree choice in this manner will almost assuredly exact a much higher cost than the random drawing will. I'm going with A for the third question.