Fuck it, I'll post a wall-text of the game's plot/lore here copypasted from 4jp just to keep it around.
Sadly I can't play the game yet but you guys might wanna try it.
Toutetsu’s ability allows her to absorb enemy attacks, so even if an attack hits her hard, it will not do much real harm to her; rather, it will become her food and make her stronger. Therefore, normal attacks fail to fully destroy Toutetsu.
For this reason, Okina decided to use Flandre’s power to destroy Toutetsu. In order to make Flan accept this job, Okina intentionally had the oil gush out to the ground, which drew the strong to trace the source of oil, find Toutetsu and challenge her. This successfully leads to the fact that many powerful beings cannot destroy Toutetsu.
With this fact as a bait, now Okina can say “There is an enemy that no one else can destroy; only you can do this." to have Flan involved.
In fact, Toutetsu’s action itself did not pose a direct threat to the surface world. The Former “Lake of Blood” Hell was abandoned, full of grudge and malice, and no one really knows how to deal with it.
This is why after Kanako and others have met with Toutetsu, they decide to let Toutetsu continues to absorb the Lake of Blood, as long as Toutetsu can ensure that the blood will not overflow.
But Okina’s purpose is clear enough: to totally destroy Toutetsu. No detailed reasons can be found in the game, but it seems that the major issue is the fact that what Toutetsu absorbs influences her character.
Toutetsu is the embodiment of avarice; even if she is destroyed, she will soon revive. Toutetsu absorbs the hatred and malice in the Former “Lake of Blood” Hell, and thus is heavily influenced by them.
Okina may be worried that by absorbing malice Toutetsu will eventually become a serious threat, so she decides to destroy Toutetsu with all necessary means.
After the incident, reborn Toutetsu comes up to the surface world and absorbs the desires here instead, so she becomes more open to negotiation.
After discussing with youkais in Gensokyo and the Former Hell, reborn Toutetsu makes a covenant and becomes the official administrator of the Former “Lake of Blood” Hell.
And Okina also becomes the administrator, as a representative of the surface world, of the Former “Lake of Blood” Hell. In this regard, it seems that Okina grabs this chance to gain control of the Former “Lake of Blood” Hell.
The endings also mention that people accept Okina’s takeover because her nature of secrecy fits the job to conceal the Former “Lake of Blood” Hell full of malice, while the nature of Toutetsu may still remain an unstable factor.