Yeah, I think the Marquis really highlights the dark side of the Federation. I have no idea how, knowing how the Cardassians operate their government and justice system, any Federation diplomat could not see the dangers of putting Federation colonies under Cardassian "protection". A government is supposed to protect its people, not trade entire colonies to a fascist state for a "peace treaty".
Oh, and, what did the Federation do once Sisko became aware of the Cardassian government arming its colonies? It did nothing. Hell, even worse, it worked WITH the Cardassians to try to destroy the Marquis. So, even with the Cardassians blatantly violating the treaty, it does nothing to bring any sort of consequence against them.