I don't know whether or not I agree with their decision, but I can understand why they made it. Today, we have no issue attempting to eradicate some viruses that have the potential to annihilate vast numbers of humans or human civilizations. We do that without compunction because they aren't considered to be intelligent life. (Or even truly life, depending who you talk to.)
The Borg, undeniably, are an intelligent race. Sure, a frighteningly alien and menacing intelligence, but nonetheless, that is the purpose of the Federation, seeking out and attempting to understand and respect a place for all such beings. And what they found with Hugh, and Beverly and Geordi fought for, was that in addition to intelligence, they also, at least some, had potential for individuality and rehabilitation. Would you expect any less of a moral viewpoint from two senior staff in the Federation?
And it wasn't totally a lost cause either. In Descent II, Hugh and some of the other Borg saved the day bringing down Lore and his dutiful Borg as he was about to kill Picard. Yes, Lore found the Borg then ruined by their half-assed backup plan and that's how the crew got in that spot to begin with, but it also sort of worked. Hugh and the other Borg who chose (former assimilated Borg making a choice) to stay with Hugh and retain individuality and a different path did. In the future, who can really predict what an asset that might turn out to be?