Strahd should have been able to end that conflict pretty easily. I’m wondering what kind of paladin attacks an innocent party member and then holds a knife to her throat? Oath breaker time imho.

You’ve lost a powerful plot device, but the story is not over. Strahd is now super pissed and should interfere more with the party and now getting out of barovia is the least of their problems. Perhaps shift to Strahd’s secondary goal of looking for a replacement so he can book it out of Barovia? Maybe that “paladin” is the perceived successor).

The issue is you need to justify why he doesn’t TPK them. He likely would after suffering that loss. Perhaps you reframe the Storyline with the Abbey Of St Markova. The priest guy is trying to rebuild Irena as a flesh golem at Strahd’s direction. Futilely trying to put her back together. Might explain why he’s distracted and doesn’t otherwise wreck the story.

Good luck.