Now I tend to perfer the TOS federation as it was less arrogant and naive, but to answer your question becuase their "contingency" was to commit genocide.
The Federation was just as prone to the option of genocide in dealing with the Borg and that was without any known link to Section 31 which illustrates the federation has always shown that it is willing to go "nuclear" when they feel sufficently provoked or threatened.
Not only that but it wasn't anywhere close to a justified response seeing as at that point the Dominion was just like every other empire the Federation clashed with...
I, for one, disagree.
Though it wasn't known to the AQ allience but the one of the goals of the Changelings/Dominion was genocide of humans showing paranoia can be justified and valid in terms of survival.
One underlying foundational aspect of many peoples argument seems to be a belief that a civilation somehow has a duty to commit what amounts to be suicide should the price of their survival appear too brutal or harsh to any degree - to me, that is an unrealistic and untenable point-of-view.
So untenable that RDM and others (credited previously in this thread) had to try and retcon things with the invention of "Section 31" - a creation I, as fan since September 1966, wholeheartedly approve and endorse.
I do not view myself or other likeminded souls as "warmongers" or "jingoists" or anything else other than realists who undestand that there are times when a people can only be as civilized and "honorable" as circumstances are pragmatically percieved to allow.
The mounting evidence and trending data did, in my opinion, allow for Section-31 to draw certain inferences and logically conclude that infecting the Changlings was a justifiable and reasonable course of action when waging a war of survival (as opposed to one fought for territorial or material gain).
The Changelings/Dominion refused to negotiate and had stated ambitions of subjugation and supression of the AQ (and unbeknownst to the Federation genocide of the human race). So both during and in hindsight we see that Section 31 did not operate without thought or reason - that there was merit to their methods and rationale.