Alright, I finally got to it!
I'm going to say this again, and probably several more times. Your characters are your strength. The dialogue was very good. I was impressed.
However, when the chapter opened up with dialogue, I was a tad confused. I didn't know who was speaking, although Cindle was part of the conversation. In addition, dwarves strike me as the kind of people who really wouldn't care what the tree is like...but that is just me. Write it how you see it happening.
Again, some of Cindle's lines are really great. The 'toothpick' line, the crushed flower line, they were very good. Great characterization.
“Come on Jyrail, it is not their fault. I mean I personally cannot get enough of myself and you are not half bad either.”
I loved this.
Maybe you could foreshadow Cindle's motivations a little bit more. Give her some "this war must end, by any means possible" type dialogue.
Also I found the 'yellow arrow signal' a little unbelievable. You'd have to be looking in exactly the right direction at the right time, and you would probably have to be above the tree cover...plus I don't think you could distinguish the yellow from other colors or from its surroundings at much distance. I suppose if your elves have supernatural senses you could solve that last one, but still.
Oh, and I
loved the scrufflings!!
The chapter was long, but not so long that I lost interest. It seemed exactly the right length. Characters are sympathetic, and although I still don't see much of a threat or vested interest of the characters in the plot, it is coming along. Let the journey continue!