Taking into consideration the fact that the rival village is getting well equipped with more sophisticated weaponry, and that is direct threat for my village and the people living in it, the logical solution would be to out-compete them, or at least keep pace with them.
If the only way to get hold onto the weapons needed for protection is to sell slaves, than the people of the village will be urged to capture people from other places that can be sold as slaves to the Europeans. The Europeans need lot of slaves, so it will not be a problem to sell them, or trade them for guns, so the village will be able to acquire the weapons needed for protection.
Now even this seems highly immoral, when someone is put into a life-threatening situation usually would do anything to get out of it, and in fact, this way was one of the tactics that the Europeans played wisely upon the local tribes.