It all depends but in my current game I normaly kill them all. There are number of reasons for it mainly deriving from the fact that I play Russia.
I don't care about my standing with the Pope. And most of my catolic allies are excomunicated.
My best generals are my Czar and my Prince and I find it imposible to make them chivalrious as I use a lot of assasins and they pick up a lot of dread from it.
I use a cavalry heavy army so pick up a lot of prisoners, even knights are imprisond as light missile cavalry can outrun them. It is counterintuitive to defeate a full stack enemy army in the field but let 40% to 70% retreate to the fortress after the battle when I will have to assault it shortly.
I used to ransom prisoners before but AI dont have money for ransom, thay may have money to ransom after first defeat but afterwards they are broke anyway. So if they are going to die anyway why should bother and not pick up extra dread.
Currently my Czar who is 46 is 9 stars and 10 dread, and my Prince (23) is 7 stars and 8 dread (he started with 4 stars).

I think even Mongols are affraid of my generals.