I think someone mentioned this already, but I thought I would just say it my way. I always got the impression Picard was supposed to be wrong in I, Borg. He was suppossed to make the wrong desicion, to teach his character that his morals and expectations will not always work in his favor. I think maybe the writers were trying to show a flaw in his character.
We see a lot of episodes that preach his good morals, and more often than not it always works out for him in the end. I feel this is one of those times that required Picard to reach beyond the safety of his view of the universe and the Federation, and he failed. And not only does he pay the consequences, but damn near loses his mind in the process.
I thought it was refreshing to see him fail, have to live with the fact that his "We are the Federation, we do no harm" line of thinking was shattered, and eventually thrown out the window with the likes of First Contact.