The main thing that struck me, and I hope others as well, was that what Rand did was sheer horror magnified - he burnt two hundred innocent beings out of the Pattern, never to be Reborn to try and annihilate Graendal. He may have even succeeded. But in order to do it, he used a weave that the Aes Sedai AND the Forsaken of the Age of Legends stopped using because mass scale atrocities such as this were running the threat of unravelling the Pattern - there was no mutual agreement; both sides just knew that the Pattern would fall apart and the use of balefire on such a scale ceased on an individual level.

In a way, this is an atrocity on a scale far outstripping anything any Forsaken has done or anything that has happened during the series, including the mass suicide of the Amayar, because the souls of Graend's servants would have, in the normal fullness of time, been Reborn without the Compulsion to lead a new life on the Wheel. Rand ended that for them. All because he wanted to become inhuman in order to exceed the capabilities of the Forsaken.

In my opinion, and I have a few theories and ideas circulating on this matter, that she received word of his degenerating state and wasn't even in that palace. There are far too many ways to maintain and cease holding a weave, and by extension far too many holes in the "she was in the palace and he balefired the palace" theory.

P.S. This is actually a section that I think BS had to write very differently from how RJ would have, because every indication before this was that while people could vanish by being hit with Balefire, a Balefire stream only carved sections out of inanimate objects. IMO RJ originally mant for Rand to walk towards the palace and start balefiring everyone and everything indiscriminately.