But then I thought about it and realised that it would not have been genocide. There are no innocents amongst the Borg. They cannot be reasoned with. If we had a chemical weapon that could wipe out all of Al-Quieda would we be wrong to use it? I don't think so as they are all sworn to kill us, they are all enemy combatants, they have made their choice (I suppose some Borg never had a choice) and we have to protect ourselves, pre-emptively if needed.
Yes, the Borg never had a choice which is why your reasoning is wrong. The episode made it crystal clear that the Borg as cyborgs are not evil, their ideology is. Once you sever a Borg from the collective he is a fairly nice guy.
In my opinion this was the best Borg story as it emphasized the ideological differences between the Feds and the Borg. The very regard for the individual is what makes Picard not use Hugh as a weapon, not convert him back into a drone (for the UFP). You cannot fight your enemy if you use his methods unless you wanna become a like him .. but then you have not won, he has.