I have to disagree here, it is all a matter of vocabulary. Instead of vassalage, use the word, fallen into corruption and all is ok. This faction that is chaos's vassal has been corrupted by Chaos and it is absolutely not against the lore.
Plus Chaos is not killing all people, if it did that, it won't have any soldier left fighting by its side; so obviously it spares lives. Moreover with your assertion, player should have no possibility but to execute prisoners and exterminate populations when playing Chaos, and it is not the case in-game.
I believe Chaos is more interested in corrupting humans and asserving them than actually kill them. Of course if it cannot corrupt or asserve you, it will kill you instead