I haven't bothered to read most of this thread, but felt compelled to finally weigh in because I just rewatched I, Borg
The solution -- to return Hugh withouth the invasive program, hoping his awakened sense of self-identity would cripple the Borg, or somehow change them -- was in keeping with the kinder, gentler Starfleet portrayed in TNG. However, as noted, the Borg are a lot more complex than our heroes think.
I point to the shifting portrayals of the Borg over the years. First, they were only interested in assimilating technology. Then, it's revealed that (all along), they also assimilated civilizations, their technology and people. Then, we discover some Borg, when separated from the hive mind, can become individuals again (Hugh, Seven). And then, we discover there are some who are both connected to the hive yet individuals also (the Borg Queen).
So given these contradictions, I think it's safe to assume the Borg are themselves a contradictory species. They assimilate others as part of their grand scheme to achieve perfection, yet there are some members who are both part of the collective and apart from it, like the Borg Queen.
If I were Picard, I would have loaded the invasive program, but I believe it would have had a disastrous impact. Once the Borg examined the program and managed to purge it -- owing to their ability to adapt -- they would have made assimilating the Federation a top priority, and sent many ships to accomplish this task.
Why? They would have identified humans as their most implacable foe, but add their biological distinctiveness to their own to gain that human edge as part of their quest for perfection. Their reasoning: Any species that could hatch such a plot is a continuing danger to the collective, and should be neutralized.