Attack the wolves that aren't currently useless due to stun/blind. Tough it out. Use some of your gold (since it is the 2nd quest, which implies you've gotten past the first) to upgrade your weapons or even level up your character if you feel you absolutely must. Use Amalia's fireball if you can spare it, and have Mouse use either poison or have Amalia buff Mouse's attack and use Mouse AOE knife throw.
Honestly, it's not that hard. The game recommends level 1 to clear it and I think that's fairly accurate - I did it with level 1 characters, upgrading Jessika and Mouse weapons once.
No, which is a bit of a waste considering - there are scenes for the goblins, mushrooms, and bandits though.