... if all the henchmen escape.
Honestly, though, I'm really pleased with how the wholesale slaughter of PCs came to pass. The predicament in which they found themselves was very clearly a result of the choices they had made. This wasn't a "random encounter table result: bodak. Everyone dies"-type TPK. Additionally, there was a light of improbable herosim at the very end which was something of a redeeming factor.
And so, without further ado, the tale of the ill-fated Sixth Expedition into the Dwarven Fortress of Sandygates:
The three leaders of the expedition were Gallivan the paladin of Iana, Erggumun the elven nightblade, and Scarth the thief. In Gallivan's service were Tormond the scarred hammermaiden and Verimyr the healer, while Erggumun led Durgrim the berserker dwarf and his faithful war-hound Monty. Scarth was accompanied by the agile spearman Aldric. The stated intent of this expedition was to explore the newly-discovered fourth level of the dungeon, map the unmapped areas of the second level, and bring a barrel of ale to the troglodyte champion K'rrk in exchange for knowledge of the location of treasure. They couldn't get the barrel in through the arrow slits (after five expeditions, they've figured out how to open the front gate, but they left the key in the dungeon while fleeing from green slime previously), so they decided to head down to the second level first. There they recovered a little treasure from some ancient bedrooms, and left a large bathroom more-or-less unexplored (after the green slime on the bathroom ceiling previously, and K'rrk's warning about the Beast In The Pipes, they were rather leery) before being attacked by a swarm of skeletal ferrets. These wounded many members of the party, and Aldric was badly hurt.
While the ferrets were being dealt with, the ghostly shade of Lasai, Scarth's former henchman who he had killed and left in the dungeon, appeared seeking revenge upon her murderer. She aged him significantly before being driven off by holy water and enchanted blades. Tormond, Gallivan, and Verimyr all recognized her and questioned Scarth briefly, to no avail. Gallivan laid hands on Scarth and they continued to the north stairwell to go to the fourth level.
Upon opening the door to the fourth level, they found a large open space with what appeared to be metalworking equipment and mechanisms full of blind cave humanoids, including their women and children. Errgumun cast sleep into the mass, felling a few, but then they fled into the darkness beyond the light emitted by Gallivan's sword. Scarth threw a torch into the room, revealing a group of archers assembling just beyond the edge of the light (biological note - they may be blind, but apparently they can sense light. Perhaps an analog to the parietal eye), while spearmen moved around the edges toward the stairwell. Errgumun attempted to put the archers to sleep, but it was clear from the noises in the room that more of the creatures were gathering around the sides of the stairwell to flank if the party charged the archers, so they staged a fighting retreat up the stairs with Scarth pouring oil as they went.
They chose the crypts on the second level as the location to defend, since they came in that way and knew it to be clear (good thinking). When they finally lit the stairs, many of the enemy burned to death, but the few that made it through managed to injure Tormond and slay Monty, over whose death Errgumun was greatly dismayed, though he put down the surviving creatures his final sleep spell before they could injure anyone else. They also discovered that the creatures had smeared their blades with feces, and there was much fear of disease. Gallivan used the last of his laying on hands on Tormond and they decided to go back down to avenge Monty and wipe them out once and for all, with the hopes that the enemy's strength had been broken in the fire trap.
And that's about where everything started to go really wrong. Gallivan took the lead, magic shield in hand, and opened the door at the bottom of the stairs to a fusillade of arrows. He avoided all but one which caught him in the shoulder and reduced him to 4 HP; he fell back, handing the shield off to Tormond, while the party's archers (Verimyr, Scarth, and Errgumun) advanced to behind Tormond and began firing into the enemy, winnowing their ranks. When only one, an armored sergeant, remained, Tormond charged him, leaving a gap in the front line, while Errgumun moved out to the side of the stairwell.
The enemy's reserve of axemen, waiting in the darkness, took this as their opening and charged the door to the stairwell. They felled Scarth instantly, and injured both Verimyr and Errgumun. They also cut off Errgumun and Tormond from escaping up the stairs. Gallivan held them off long enough for Verimyr to escape, taking the injured Aldric and rearguard Durgrim with him, before being struck down at the foot of the stairs. Errgumun managed to slip silently away from his pursuers, and Tormond found herself surrounded. She maneuvered about, seeking an advantageous position and moving towards the stairwell, but Errgumun grew impatient and made a break for it while she had them distracted, lighting the oil in Scarth's pack afire as he went. Three creatures split from fighting Tormond and pursued him; two were slain by the fire, but the last cut him down halfway up the stairs.
And so Tormond found herself alone in the lair of the enemy, outnumbered eight to one, her mentor and lover Gallivan incinerated by an ally, with a roaring wall of flames between her and the only known exit. So she did what any right-thinking warrior woman would do - slew her foes to a man, sustaining only minor injuries, sacked their lair, discovered their terrible deity, desecrated their vile altars, looted the bodies of her fallen allies, stripped Gallivan's corpse of his armor, put the body in a sack, and began the long, slow trek back up the stairs (where, incidentally, she killed the creature that had slain and was now eating Errgumun). She encountered no resistance on her way out of the dungeon.
It was a very tense combat.
Durgrim's group was only marginally less fortunate; they were accosted by Lasai's wraith, who demanded a proper burial for her body. With no magic weapons to resist her, they agreed, and were lucky enough to meet no further enemies on the way out. She was buried in the sand outside the dungeon with a marker made from the shattered planks of the ale barrel.
Upon reconvening, all present agreed never to set foot in that accursed dungeon ever again, going so far as to sell the map to a merchant company specializing in dwarven antiquities. Durgrim retired to parts unknown, while Verimyr went back to hunting and trapping in the marshes. Aldric disappeared quietly, and Tormond paid to have Galladin resurrected... but he came back female, thereby complicating things greatly. As a paladin of Iana, returning as a female opened up advancement for him among the amazons, and he (er, she) set out to the north for Myrmidia, leaving Tormond alone with her scars, the magic shield, and the only knowledge of both the location of the chest of buried treasure and the terrible thing imprisoned beneath Sandygates...