The Federation wasn't choosing between genocide and survival. They chose both.
Poor wording on my part; I apologize. Please allow me to re-phrase:
I absolutely reject the idea that the Federation had to choose between genocide and defeat at the hands of the Dominion. That is a false dilemma.
Should they have handed the cure over to the Founders and hoped for some goodwill in reciprocation?
You would be surprised how often good will is reciprocated when it is offered with genuine altruism.