While I can see the obvious benefits for including the Dominion in INS, I can also agree with The Powers That Be in their reasoning that the audience shouldn't be expected to know the ins and outs of what's going on in DS9 in order to follow the plot (I seem to recall this was Berman's reasoning -- that there might be casual TNG viewers who hadn't emigrated to the spin-offs and who therefore wanted a "clean" Next Gen film without any of the mythological baggage that had been built up in DS9 and VOY).
On the other hand, the way I understand it Michael Piller's first thought seems to have been not to include the Dominion
as such, but simply to pepper the plot with hints of the ongoing story arc. So the events of the film would use the Dominion war as a backdrop, without necessarily being 'about' the Dominion war. Hints of this do carry through to the final product, but in a vastly watered-down form.
I like the idea that a scrolling 'recap' might have worked as a compromise between maintaining consistency with DS9/VOY, and still being accessible enough to the casuals in the audience...