We haven't seen any evidence of that. In fact we know nothing of the proposed peace treaty, aside from the fact it contains a heavy financial penalty for the empire, which is designed to be alleviated considerable during the negotiations. That seems quite wise and practical as that would make the empire feel like they did their best. But otherwise there's no indication whatsoever the empire would lose a single bit of their indepence. There has been no talk about territory to be ceded. At the moment there is no peace and they are at war. So, bombing or anything is natural. That's what war is all about, after all. Yet the folks of the capital have been living their lives normally, as if there was no war, because the Japanese certainly aren't keeping it hot.
One man's junk is another man's treasure. Who's to define its worth? A 1000 yen kitchen knife from Japan would be worth ten or fifty times more in that fantasy world because they can mass produce neither high quality steel (let alone stainless steel) nor the knives themselves. Thus the people would be grateful for receiving such. It's not an option for them to walk into a dollar store to buy one with their pocket money. A human rights activist complaining about that can go work in the salt mines.
Except that it was never conquered or oppressed. Instead the country the empire attacked wants peace despite their overwhelming military might. If the roles were reversed, do you think this prince would have done anything else but rob and burn down the Japanese towns and enslave the people? No, because we already know that's what he does from what happened to the bunny people. The dude is fucking lucky to still possess a kingdom to inherit but his peanut sized brain can't comprehend it.
You are thinking 180 degrees backwards here. The more powerful the JSDF, the happier the bunny princess. Because it ensures the empire will be utterly destroyed once she can instigate a good all-out war between the empire and the Japanese. She won't suddenly start to pity the empire. Although the open war will never happen, so it's kind of all the same. She's reduced to trying to execute one plan after another, but she'll never succeed. Perhaps her best bet is the second brother. The other countries probably don't share the values of the Japanese, so they might annihilate the empire if given a chance.