Just some general GM advice for you not related to the setting:

One thing that players really need to know, is that their actions have consequences.  This is REALLY important in my opinion.  If you let this slide, it opens the door for them to run wild and you can lose control of the game.  He threw someone out a window?  Sounds like a murder and the police will get involved and look for him.  Broke a deal with a fairy?  Wow.

You need to bring pain down on this character so everyone knows that actions like this have a reaction.  I speak from experience.  I let something like this slide once, and I lost control over the game.  The PCs ran wild doing whatever they wanted since they felt like nothing would happen.  It's a mistake I won't make again.

Now I'm not saying railroad them and force the outcome here.  I would beat the crap out of this guy, but let the group see if they can save him somehow.  It might end up being one of your best games ever.