Leto Lizardmen Hunting
2) Rath tells you about the growing population of Lizardmen towards the north, in Oren Territory (what the dialogue screen says about "the north side of Oren" is a translation error). Since the Duke of Oren would strongly object to Giran troops conducting a clean-up operation in his fief, the Guard, at the request of the Aden Commercial Guild, is hiring mercenaries. Agree to join them. Rath then gives you a list that contains all Leto Lizardmen except the Shamans. But if you have to kill one in self-defence (or for pleasure) it doesn't have any impact on the quest. You just don't get the quest item from Shamans.
3) You will find the simple Leto Lizardmen (lvl 35, passive) in the southern part of the Plains of the Lizardmen, towards the river. Leto Lizardman Soldiers (lvl 37, aggressive) and Leto Lizardman Archers (lvl 36, passive) can be found in the eastern part, towards the mountains, and the double HP Leto Lizardman Overlords (lvl 40, aggressive) in the western part, towards the road. Double HP Leto Lizardman Warriors (lvl 38, passive) are all over the Plains of the Lizardmen. The quest item acquisition rate is about 1 out of 3.
Beware of the roaming groups led by an aggressive lvl 40 Lord of the Plains. They are very dangerous and don't give the quest item.