there's no evidence that Dougherty lied to the council. The entire set-up of the observation post(with a large group of Starfleet personnel) as well as the holoship indicates that the council was fully aware that the planet had a small number of inhabitants. Once again you're forced to try to fill in plot holes with speculation that contradicts the movie in order to make your argument.
So you're saying the Federation Council okayed the use of an illegal cloaking device?
and that this is eminent domain
No, its not eminent domain doesn't work that way.