Fycro was smart, and smart people definitely did not choose paths with no options.
However, even if Saleen knew that Fycro intended to use him, he intended to try his luck at Alchemy City with the Bug Angel Armors he had. The Devil Flying Armors were made specifically for demons, but the Bug Angel Armors were suitable for many species.
With an ally like Grand Duke Iron Blood by his side, Saleen would be able to cut his losses considerably.
While the Grand Duke had no intentions of losing too many of his troops, the venture was worthwhile. His interests at sea were limited to Cloudflow due to Alchemy City.
Even after he took out Lianyun City, he had no intentions of expanding his forces further, as Alchemy City could stab him in the back at any moment.
Alchemy City had control of the sea routes, making Lianyun City lose its economic value, and was self-sustainable, so it had no fear of being harassed by the Grand Duke.