(It's the War Lord who gets erased by the Timeys, not the War Chief)
Yep. The War Chief gets gunned down by the War Lord's henchmen, after which they're ordered to "Dispose of the traitor's carcase."
Now he could just, just possibly be seriously injured and faking death till he can regenerate in safety (which is how Terrance Dicks has it in Exodus)... but really, they know he's a Time Lord, you'd think they'd watch out for that sort of trick.
They know he's a Time Lord, but they may not know that Time Lords can regenerate...