The Female Changeling had promised the Breen control of Earth once they won the war, so the Confederacy would not want to totally obliterate their target--it's been shown they use slave labour for their mining operations, which would be likely the same on Earth and the other worlds of the Sol System.
Also, the effects of attacking and causing massive damage but leaving demoralised and defeated survivors would go a long way in the psychology of war--showing everyone just how vulnerable Earth was to a conventional attack, everyone would be wondering what else the Breen could do to it or other planets.
Commander Austin Harris, First Officer, Deep Space Nine (by FltCpt. Bossco)
8.01 - Darkest Before Dawn
(Chapter 8 added, 12/09/2015)