I never knew you can back out of the conversation Balgruuf has with Avenicci after you first enter Dragon's Reach. Pick the option 'A dragon destroyed Helgen and its headed this way.' When he says "By Ysmir, Irileth was right!" you'll no longer be locked in dialogue and you can back away. Irileth will send guards to Riverwood, fulfilling your promise to Alvor/Gerdur, solving the ludonarrative fuckery. You're free to do whatever you want.
After you leave the cell Balgruuf will remain on his thrown and as long as you don't approach him he'll stay there. The other NPCs will revert to their pre-main quest AI packages. You can buy/sell with Farengar douche, collect the pitiful bounties from Avenicci, etc.