Setting up the grid is not a bad thing. It's a way of defending the timeline against Temporal Cold Warriors and random crazies with access to time machines. Every dangerous technology needs some degree of regulation. That's not totalitarianism, it's just security. And there is no technology more dangerous than time travel.
Perhaps what I failed to make clear is that the grid does not remain a secret after it goes into effect. Once people figure out it's there, they can find the generating satellites and operate/repair/protect them. After all, there has to be knowledge of the grid's existence in order for clearance to be sought and given. It was only the design and construction phase that was kept a secret, for reasons of security that I thought I'd made quite explicit. If time travellers knew where and when the grid was built and whose idea it was, then they could go back and prevent its creation. The only way it could possibly exist is if history never knows how it came to be. The creators of the grid weren't trying to keep their own peoples in the dark -- they were trying to keep their enemies in the future in the dark. Yes, there are situations where secrecy can be corrupted, but there are also situations where it is absolutely indispensable.
So no, you're dead wrong if you think that Lucsly "lost it." He remains as he always has been and always will be, completely devoted to the laws and principles that the DTI was created to uphold. Once he learned from Jena Noi of the grid's future existence, he realized it was something the timeline needed for its protection. And he knew from her that it had to be created in absolute secrecy. Who better to do it, then, than the drab, ordinary civil servants who can disappear into the background while history is preoccupied with more flamboyant types like presidents and emperors and starship captains? And really, who better to avoid any sort of totalitarian abuse than someone like Lucsly who has no ambitions to power, no goals beyond doing his job?