Oh I once did a whole summation of the whole reasoning behind Varania (IMHO). I choose to kill her every single time. It isn't about Fenris's state of mind, it isn't about Varania's poor, sad, life (whatever that may be). It is about choices.
My favorite thing in the world is when Varania looks at Hawke and goes "please, don't LET him do this." and Hawke takes a step back and goes "Fenris does as he LIKES." To me that says more about free choice and letting Fenris truly be free in one moment than anything else. Plus, like with Hadrianna.. it is NOT Hawke's place to play babysitter and "fix" Fenris. It isn't Hawke's place to tell Fenris how he should or should not act.. what he should and should not do. Even if you try to let Hadrianna speak or try to take over the conversation and let Hadrianna go Fenris makes a clear choice, and he has to live with that. He grows because of that. "I wanted to, but I couldn't..." For me it isn't about the hate eating him up inside, it's about finding a balance between the hate that "they put there," and what he truly wants out of his life.
Danarius and Hadrianna and Varania are HIS ghosts. Varania herself redeems no points from me, and I think she signs her fate away the moment she makes her choice not to side with her brother. I've written tomes on this already, LOL.
The point is I think for Fenris it isn't wise or fair for Hawke to be the one who chastises him or tells him what decisions he should make. I don't think Fenris will ever be rid of his hate completely, but I think he can learn to live with it, and learn to use it, and not let it consume him. Yet for the ones who did it to him, who put that hate there, they deserve his wrath, and they deserve their fate. Varania, well to me she is nothing more than what Hadrianna started as "A sniveling social climber who would sell out her own children.." for a chance at power. Nothing about her redeems her to me.
Also, as a side note, and I know I've posted this before but... "It is still legal for elves to be sold into slavery in Tevinter, and many elves choose to sell themselves into slavery to provide for their families. This results in many Tevinter elves who are not slaves being better off than elves in other areas, even if elven slaves fare far worse."
And, "while lyrium may be used to send the individual waking minds of mages into the Fade, blood magic can be used to find the sleeping minds of others."
So basically that tells me that Varania did not have it as hard as an elven slave, and moreso that she may have even had it better than other elves in Thedas -- being a free elf in Tevinter.
Also, the second quote pretty much proves my head!canon that when Fenris says Hadrianna "tormented his sleep" it was more than simply waking him up in the middle of the night or playing pranks on him. As an apprentice to a blood mage she might be practicing her spells and doing all sorts of things to "sleeping minds." Fenris is not above being influenced by blood magic as you can see in the quest where you question Idunna and she uses her blood magic to control Hawke. Though, Fenris realizes something is wrong immediately, but he still gets influenced (shudders at thoughts of Danarius being powerful blood mage).
So yeah... I'm really not keen on going into Varania again, but I have no sympathy for her, nor Hadrianna.
As for torturing.. *spits* "That's what her bloody deal was worth!" <-- with you 100% Fenris.. I don't think there is anything that woman would NOT have said to save her own demon-infested skin. Torturing her would be pointless. She couldn't offer anything, and "By now there is no human left." (Thank you Anders). It wasn't a mistake to kill her, but Fenris just feels bad for having made a promise to let her live, and "realizing [his] morals aren't as strong as [he] believed." That's the hate he alludes too, not so much regret over having killed her, but the way in which it was done.
wall-o-texting again.. *sigh*