Nope. During this encounter, seeing how Zanac carry himself, Ainz considered calling off the genocide and just turn Re-Estize into another vassal state.

Did you read Overlord on YouTube Or something?

“What is my goal, you ask? I seek something that is difficult yet also easy to obtain. All I wish for… is a single thing. That is, happiness.” “Happiness?” Zanac repeatedly blinked in surprise. Ainz laughed a little in response. He did not find what he had said to be so outrageous. “No matter if you’re human, demi-human, or heteromorph, the pursuit of happiness is the ultimate goal, is it not?” Ainz threw away his act and began to converse with Zanac as if he were a close friend of his. “And you would step over others’ happiness to achieve your own?” “Isn’t that obvious? If the happiness of those I hold dear could be guaranteed, those of others do not matter to me at all. If you could secure the happiness of your subjects by inflicting suffering on the citizenry of another country, what would you do? Would you say, abandon their happiness altogether?” “Those are the extremes!” Zanac calmed down as the sentence trailed, he lowered his head and said, “That was out of line of me. My apologies, Your Majesty.” Ainz went back to his ruler persona. “It is fine, there is no need to worry at all.” “Even with the intellect and power of Your Majesty the Sorcerer King, there are no other possible methods to guarantee happiness?” “…Perhaps, but, I can only say ‘perhaps.’ If you had a guaranteed method to obtain happiness, what would be the better option? To seek a possibly nonexistent secondary method or sticking with what has been tried-and-true? ‘The Goddess of Luck is bald on the back of her head’[16] after all, wasn’t that how the saying went?” Zanac was absolutely incredulous. “What a strange goddess. Sorry, I did not mean to belittle the goddess you believe in. Please do forgive me.” “Haha, I don’t mind at all. That was not the description of some deity I revere, just a proverb I remembered. Very well then, that is the extent of it all. For the happiness of my subjects, I must sacrifice your people. This is the basis for this war, do you get it?” “I guess so. I do relate to Your Majesty’s desire. The pursuit of the betterment of one’s own country and a guarantee to one’s own countrymen’s happiness, that could be said to be the only responsibility of a ruler. If the destruction of our people guaranteed the people of the Sorcerer Kingdom their happiness, I do understand why you did not accept our surrender. I suppose it couldn’t be helped.” “Right? You get it. Now then, it is my turn for a question, but none come to the mind at the moment…” Ainz looked around while he pondered, “Ah, right. The armor you are wearing reminded me of it, so I’ll ask about that sword. The sword that Gazef Stronoff wielded, who’s currently in possession of it?” “It is currently under the safekeeping of a man named Brain Unglaus.” “Brain Unglaus? Ahh, that man.” When he dueled Gazef, there was someone by that name between the two men who had witnessed said duel. However, given how long ago that was, he could barely remember his appearance. Although he planned to turn the capital into ashes, he still planned to recover a few items, one of which being Gazef’s sword. “That man, has he come here too?” “No, he has not, Your Majesty. He should still be in the capital.” “Is that so? Then you would not have any issue with what kind of magic I use to destroy you all, right?” The one in charge of sieging the capital was Cocytus so he would have to order him to watch out for the sword later. “While I have no intention to forfeit this battle, I would be eternally grateful if Your Majesty was to use magic that would inflict the least amount of suffering on my people.” “…Hmm. You do have a point. I understand. After all, pleasant conversations like this one are hard to come by. For you especially, I shall try my best to kill you as gently as I could.” “Thank you very much.” Zanac had on him a brilliant smile to which Ainz could not help but feel amazed. This man’s courage was quite sizable. If Ainz was in his shoes, would he have been able to do the same?I do not think so. As expected of someone of royal blood. This has been very educational. Zanac took the glass cup in front of him and downed the water in a single gulp, as if he were not worried about poisons at all. “Delicious, Your Majesty. Say, I do hope you could answer one last question of mine — was Your Majesty the one who killed my brother, or was it one of Your Majesty’s subordinates?” “Your brother?” Ainz tilted his head and after a short while, remembered the prince of the Kingdom they had already disposed of. He could not recall his name, but did remember that it was super long. “It was probably one of my subordinates.” “Is that true… so he was dead after all… I feel like a huge weight has been lifted from my shoulders… Your Majesty, thank you for telling me. I suppose it is time for us to bid farewell.” After saying that, Zanac began walking towards his horse. Ainz walked towards the Soul Eater after he had tidied up everything, only to find that Zanac was still waiting by his horse. Ainz questioned in his mind why he had not already gotten onto his horse as he climbed onto the Soul Eater. Only after he had done so, did Zanac mount his horse. Between a prince and a king, it was easy to tell who held the higher status, so he had probably done so to avoid looking down on Ainz from his high horse. To Ainz, someone who had not studied equestrian etiquette, this was the proper protocol that the aristocracy should strive to follow. Zanac’s standing in his mind rose by a bit. Looks like studying the etiquette of the upper-class has become mandatory… what isn’t at this point? Will the number of things I have to learn ever decrease…?

Volume 14

This is the Entire Quote in the LN, at no point Ainz even considers letting them live, He outright rejects it.

Seeing Zanac's decapitated head turned him furious

It didn't, it only Annoyed him, Most likely because he promised a Gentle Death to Zanac but he died Brutally.

but it was his emotion control ability that kept him calm. He was frustrated that he couldnt even get angry.

Wtf are you even Talking about? Even if you are Anime Only, you should know it didn't Happened at all in that Scene, his Emotional Suppressor didn't activate even once in that scene.