On of the things I love best about Erfworld is that it rarely if ever resorts to idiot plots, i.e. plots which depend on one or more characters being stupid for no reason except to advance the plot (see also nearly every episode of Heroes). Again and again, we are shown people who do things that seem stupid only to later find that the character had a perfectly rational basis for the action. Not necessarily a good reason, but a rational one. Here, we learn Slately knew perfectly about Haggar's treachery. He just held out hope that when Haggar saw the GK machine in action, Dickie would grow the hell up. And even if he didn't, Slately still believed that falling to Haggar would be preferable to falling to GK, since the former would at least be a victory for Jetstone's way of life and Slately's own ideals.
Not that I like Slately, of course. He doesn't just believe in Royals Uber Alles, he also believes that some Royals are better than others, and by a shocking coincidence, the Royals who act exactly like him are the best of all. What Slately can't see (and why he is likely doomed) is that this battle will not be won by numbers or force of arms or superior ideology but (like TBoGK) simply by who can best think outside the box and defy convention, something completely beyond rigid, stuck-up old Slately. That's how Parson won in Book 1 and that, I suspect, is how Jillian will pull out at least a short term win here, by being completely unconventional in her approach to ruling.
Prediction: Slately will follow Bea's suicide strategy rather than submit to Decryption.