If I was a GM encountering this from players, I would absolutely allow it, and then the players would discover the consequences.
For one thing, most of the peasants would die. The few remaining would be so horrified that they'd probably attempt to bring down whatever authority figures exist on to the player characters, unless of course the PCs killed them in cold blood. There are consequences for _that_ too.
For another, whatever they used it against - if it survived somehow - would remember that tactic, and might use it against them.
And as usual, the use of overwhelming force (regardless of source) is something that people talk about. Any observers would report what they saw, and that information would spread. Further consequences there, both to the party's reputation and to the number of enemies that have greater resources than the party.
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