The Heroes of Tara liberated six dryads with the help of clever magic, a friendly elephant and an old druid. In the process, they learned much about Crannog's plans. "Dozens" of dryads had been captured in their trees, turned into "dryad poles" against their will for use in creating "live ships." A sentient ship allows a sea captain to harness the dryad to do his bidding.
In rare cases, a dryad may be convinced to give her life towards creating a live ship, but it would be rare, requiring a dryad with a sense of adventure and desire to experience everything the world offers. Dryads, by nature, don't travel far from their home oak, so such a one would be very rare indeed. That ship would be as unique and amazing as the dryad within it.
Putting the pieces of the puzzle together, the "dryad poles" were meant to be used as main masts, turning a newly built ship without memories, into a living ship. The elven silk and rope were also destined for a ship, providing fire resistant "masterwork" sails ready for enchantment. But why all the iron? Wooden boats use some iron, but not in the quantities Crannog was stealing from Tara's iron mine. The plans uncovered in the lair of The Beastmaster, where the dryads were liberated, tells the story.
As many as 600 slaves are to be stored in the hold of one of Crannog's ships, the iron used as shackles after another ritual that creates a permanent "Cure Disease" to those "wearing" the item. With a couple dozen ships, Crannog could enslave a city of 14,000 inhabitants. Tara, with it's 5,000 people would be a short stop along the way.
Humanity, according to Crannog and his followers, is simply too dangerous to let run loose on the surface of the earth. They have shown themselves to be irresponsible with magic, amoral when it comes to war, and unable to learn from their mistakes. Killing them all is drastic. One does not kill chickens or cattle, one controls them and uses them for the benefit of all. Yes, proper stewardship of humanity, according to Crannog's philosophy, requires control.