Tyrion has burned WAAAAY more people alive than Danerys.
Remember the Battle of Blackwater Bay, where 100,000 soldiers followed Stannis into a wildfire bath and most of them were blown to bits or burned alilve? And it was all Tyrion's idea and done at his command?
So what the hell is he suddenly getting all squeamish about now! It's totally out of character, he knows what warfare is about, he jshould just be telling Danerys that it might be impolitic to actually feed people to the dragons. In front of witnesses, anyway.