An interesting scene--it seems a bit like a "rant" on Macet's part. If I didn't know better, I'd say the Gul had a lot he needed to get off his chest about the incident, which he'd had buried up inside him for a long time.
Again...I have a lot of respect for Picard--but you are all too right in that his "Federation Values And Principles Above All Else" leads him far too often to hesitate at crucial moments when you have to set them aside and do what is necessary
(I was absolutely disgusted with him, for example, in "Silicone Avatar", when he accused RIKER of being out for revenge
, for daring to suggest that maybe they SHOULD kill the crystalline entity before it kills more people....)
To wit, "Oh, an entire race is about to perish from a purely natural disaster, and I have only a few hours to decide what to do--but the Prime Directive is a moral absolute, never mind that I HAVE ALREADY VIOLATED IT A GREAT DEAL OF TIMES BEFORE, BECAUSE IT WAS NECESSARY!!!"
Jean-Luc is a superb diplomat, and a good leader of men--but as a general in times of war...he is far too much of a soft-hearted moralist to do what often has to be done.
He shares with Admiral Nechayev an overdeveloped faith in Humanity's Growth. (Although, granted, Nechayev is worse.) Note all his annoying lectures about the 20th and 21st Centuries, and how, "It's a good thing we've progressed beyond all those violent, primitive impulses".
Fortunately, after a lot of minor shake-ups (such as his reflections on sparing the Borg in "Descent, Part I"), he finally got all that self-righteous naivete knocked out of him as of First Contact