Many of the reviews I read that panned this episode pointed to this exchange as a primary reason. There has been a feeling among some fans (especially those who are staunch supporters of the "battling bard") that "Xena's moral choices are always right, and Gabrielle's are always wrong." I understand how this point of view can be taken, but I don't completely agree with it.
First of all, there has been at least one time where Gabrielle's choice was the better one (and please, note the use of the word "better" instead of "right"). In The Price, Gabrielle's kindness and insistence on diplomacy are what end up saving the day - Xena's ruthless command decisions in that episode are cast in a decidedly negative light.
Second, to look at the issue in terms of "Xena right, Gabrielle wrong" oversimplifies the complex morality the show sometimes examines. In fact, Xena's decision is a prime example of this complexity.
How does one go about quantifying the greater good? Is it, as Spock said in Star Trek 2, "the needs of the many outweigh the needs of the few or the one"? Can raw numbers so easily define the correct moral choice? Hardly. As Star Trek 3 goes on to demonstrate, sometimes the needs of the one are more important. Morality is rarely clear-cut.
Looking at Xena's choice in Legacy, I believe that it is justified, and even fits the themes the show has presented for years. Gabrielle was responsible for Korah's death - she made the decision to kill him in that sandstorm (that was a poor decision, granted, but that is ultimately beside the point). The punishment that was going to be meted out - before Xena arrived and saved the day - was little more than classic vengeance dressed up in "the law". As we all know, vengeance is something that the series has been against since the earliest days, dressed up as the "cycle of violence".
So Gabrielle's death, while it may have been just under the law, was not doing anything to stop the cycle of death and revenge. Just as Gabrielle argued in Locked Up & Tied Down, punishing Xena for her crimes doesn't really do anything to repair the damage done, it just tries to give those left behind some sense of closure.
