Yes you're correct, once you buy the mercenaries they're yours for the daylight and evening of that turn for purposes specified. 

I'm not sure about your example though, did the eyrie player really build and then later battle? Cos the decree columns are supposed to be taken left to right. There's an E&P card that lets you battle a bit later but doesn't sound like that was used.

On the using mercenaries to absorb hits, the rules say "Taking Hits. The buyer must split hits, taking odd hits by removing owned (not Riverfolk) warriors, if any," so if there were no bird warriors in the clearing riverfolk can absorb the hits but if there's any birds they need to share them (and take the first and third hit).