The culprit to me seems clear. Who is the only person who has violated the treaty so far as to actually recieve the punishment, enemy status of all three signatories? Dalamar. I think we are all forgetting a fourth signatory, however, and that is the Church. The punishment provisions should include excommunication, if applicable.
I would recommend the Church take action now and excommunicate Dalamar, for he is certainly the one that built that shrine. If not, I'm sure that he will certainly continue to use the powers vested in him by the Church to destroy a treaty it helped create.
This brings me to the heart of the whole matter of the difficulties with the treaty. The issue at hand is the Church, not Shallam directly. The treaty is about the placement of shrines, and the temporal power that Church members are able to wield near them. The citizens of Ashtan and Hashan sought a limit on their spread, because they are a direct threat, just as much as an Occultist with all of his entities is feared, for what use are they other than to deal death to the unwary?
Shallam is under the control of the Church, that is clear. The highest ranking Church members are also the rulers of Shallam, and they consistently put the interests of the Church ahead of the interests of the citizens and any organizations unfortunate not to be directly affiliated with the Church (essentially any guild not the Paladins or Priests) - witness the exodus of non Church aligned guilds and people from Shallam - they realize what's going on.
In the interests of a peaceful conclusion, I propose that the current treaty be dissolved and a new one made. Ashtan and Hashan should renegotiate one with the leaders of the Church, and leave Shallam out of it. Make the treaty hinge on the behavior of the Church, because if you negotiate with the Church, Shallam surely follows. Require violators on their side be excommunicated (starting with Dalamar as a good faith gesture). Finally, it should be required that the Church be moved back to Delos where it belongs, and that no ranking Church members (and this includes high ranking members of the Priests and Paladins) be allowed to hold a political position in ANY city other than that of a mere citizen of Delos. Then you end the tendency towards a despotic theocracy wherever the Chrysalis Basilica roosts, and you allow the Church to become like it was, an organization to help all Achaens, rather than the cynical despotism it is now. If the Church really wants peace, they will have to release their grip on c
Decnavus

Penned by my hand on the 15th of Chronos, in the year 238 AF.