From Lyceus' comments in this ep, it seems he and Xena were among those who practiced with weapons before Cortese's attack, that they'd gotten good enough to consider a defense, that he admired his big sister's confidence, willingness to stand up to bullies, strategic thinking and overall "warrior spirit," which she retained in the alternate scenario. The Fates enabled her to compare outcomes between her using these strengths to fight as she did in her real life vs. if she'd avoided using them for violent means, as she tried to do in the alternate life.

It's interesting the Fates said she'd reclaim her actual life if she shed "blood in anger." She frequently expressed self-loathing about the anger she carried that motivated and characterized so much of who she was. In the past it led her to become a warlord, but she accepted that, without it, she wouldn't have been a savior of her village or unwitting/intentional hero to so many others. Kind of what she learned about her darkness in DREAMWORKER. IOW, I don't think it was much about balance in the universe as Xena learning about the balance she needed to achieve in herself.