I saw an amazingly relevant פשט on this. The brothers realized that if they killed a whole city of גוים the rest of the world would be outraged and would not leave them alone. However, they realized that if the people of שכם converted they could then kill them with impunity as they would be killing Jews and no in the world cares when Jews are killed.
When I first heard this I thought that it was a modern pshetl, but then I saw it is said in the name of R' Yonason Eyebeshutz. It is amazing that this basic truth has not changed in the past 250 years.