SCI your post has some errors, a couple of strawmen and a lot of good points. Way too much stuff to cover, so I'll just respond to two points:
One: Child Founders, and that Section 31 essentially tried to destroy the Founders *Before* the war had even properly started. It's not my fault that writers didn't emphasize this and it's left to us (mostly you) to fanwank this. I'm using fanwank as a positive term here. The writers just had the characters do a bunch of handwaving and didn't even give one line of dialogue to what I just said. Just a bunch of shoehorned rhetoric essentially saying "Your Federation isn't so goody-two shoes is it??"
Of these operations, none are particularly magnificent demonstrations of power -- nor particularly competent, when one stops to think about it.
*again* referring to Julians quote in "Extreme Measures", Bashir is pretty GD amazed. That it took 76 people from a lot of different fields to create the virus.
I'm not excusing Section 31. Or painting them as heroes or even justifying their existance. I'm saying the situation the writers gave us doesn't justify the moral hand-wringing over "OMGGENOCIDE". What's the diff between a virus and a fleet? The Founders are not so much a race as they are 'the head of the Dominion'....and war has never had any problem with trying to wipe out the head of the organization you are fighting.
Again, just give us one line of dialogue about the other 98 kid founders...say there's a minority section of The Founders who want nothing to do with the AQ...say The Founders are all that's keeping the GQ from the Borg...anything, and I think it helps paint a more interesting picture
edit: But I appreciate this discussion, it's very interesting..