Nothing in this world spreads faster than fear, because it is precisely out of fear that people will spread its notoriety.
For example, a murderous villain and a saintly monk who practices good deeds, the villain's reputation often exceeds the monk's, for anything dangerous tends to make a lasting impression.
What Xu Lao is doing now is spreading fear. He also believes this kind of massacre will gradually diminish, because when this fear turns into reverence, the sacred land will reveal its benevolent side. That is deemed as the best approach to combining both might and kindness.
But before that, who knows how many challengers in Xiling will have to die.