No, there is not option to disband units. Starving them until they get disease and die of it is the only way unless you can toss them against someone. For normal units, taking them to a sea province with a properly equipped commander and stranding them there will kill them (remove item from commander and place in lab).
For the Faerun map, I suggest just leaving Ermor out, I've noticed it tends to screw things up in more ways than one.
Ah well, I do like your suggestion about drowning them That'll be quicker than throwing them against the enemy, who's further away than some sea provinces, hehe. Thanks for the info!
__________________ "You can have peace. Or you can have freedom. Don't ever count on having both at once." - Robert A. Heinlein