'... Is he being serious right now?'
Even if she was only a first year, Isabelle wasn't stupid, nor was she blind. It was clear that he was only talking in attempt to distract her, seeing as his hand had started to creep forward slowly. She wasn't even looking at him as he spoke, as her eyes were still locked on his hands. Surrender would indeed be the option that a smart person would choose. And here Fallow was, slowly reaching for a drawn bow. Without much hesitation, she let both of the arrows loose, sending them straight for his torso [10% damage, 10% damage].
Once he grabbed the bow, Isabelle struggled for a brief moment, planning to kick him before she stopped herself. He was in the middle of summoning a spell from his book. Letting go of her own weapon, the cat simply turned around and... ran away. While he spoke of how grand this ending of the battle was, Isabelle had taken the opportunity he had given her by jumping off the same side of the cliff that she had only landed on moments ago. Even after landing in the field that had been mostly burned to ash, she kept moving, both to get away and to charge her semblance if need be.
After all, the battle was about to end anyway, and she could just get her bow back after he knocked himself out of the match with his own attack. And, even if he did get out of the way of the ice daggers, Lucina was there and ready to strike. While she didn't see Fallow as being extremely bright after that stunt, he was at least right about the ending of the match. It was going to be beautiful.