Am I to understand that the point of Destiny was that although the Federation was pummeled,our guys get massive brownie points for "listening to thir inner hearts"?
Well, my take on it...:
They get "points" for holding onto their sense of virtue, their sense of identity and their sense of duty to the ideals of the Federation. And that's not a clear-cut or easy thing to do in this case, nor was it presented as. Usually the threat isn't at this level - this was
it.
Everything about the Federation was being threatened - not just its physical elements. Its ideal that survival isn't enough, that you have to live for something positive (the whole idea behind the
Luna-class mission - a reminder that the Federation boldly reaches out the hand of peace and explores with a desire to learn, rather than simply
living)- that was under attack too. Not just for them, but for us readers. How
we view the Federation was put under intense pressure, not just the "actual" Federation in-story. (That's one of the reasons I think so highly of these books- they were an experience that made me confront how I relate to Star Trek as a "universe", not just a fictional tale). Whether the characters fought back with everything, didn't and instead held things like thalaron back to preserve their ideals...either way, in this case they were risking the loss of the Federation, and (on the experience-not-story level) risking our disappointment in them. This is the point of the Borg story arc here, I assume. Take the "Borg problem" and all the thorny issues it entails and finally throw it with all possible force at the Federation and the readers. The Federation was well and truly torn at in the trilogy - not just for them, for us, as these on-going discussions show. And if you'll forgive this rather poetic idea, we, in this discussion and the others we've had, are just like the characters in "A Singular Destiny" and "Losing the Peace". We have to try and put it back together, deal with what we've lost and value tightly what we have left. Because we all lost something.
Even if the thalaron and so on could have beaten the Borg (and several people have given good reasons it couldn't), the Federation would still be dead. In a different, less literal form.
Maybe more of its people would be alive (though, as discussed, probably not), and maybe that's good enough. But maybe it isn't. This is what the trilogy's characters had to deal with. What they- and we- have to ask ourselves.
I propose: Virtues and a sense of values and identity are more important than mere survival - which is why Starfleet was fighting in the first place. If they were interested in survival at the expense of virtue and personal or social values, why were they there? They had fast starships- why not turn tail, wave goodbye to the rest of the Federation and run at warp 9 for the Bajoran wormhole? They could have done it, easily. But instead, they put those other things I mentioned ahead of survival and acknowledged that there's more to existence than a simple desire to keep living.

If individual Starfleet officers are willing to do that on the smaller end of the scale, why not the Federation and Starfleet on the larger end, when it comes to a certain point at least (that point being, "you can survive...
if you give up your sense of self, your ideals (what
Sci called their soul)?" If a Starfleet officer had been told "you can survive...if you turn your back on your sense of duty and your values as a soldier and run off now", I doubt you'd be pleased to hear them say "sure, good idea". So why should the society that produced that soldier be willing to survive at the expense of
their duties and ideals- those of peace, stability, understanding?
Having the Federation heroes consider whether they
should be prepared to become those cold-eyed anything-to-survive folks you mentioned is essential to a portrayal of this society, because it's not something they'd accept easily. And it doesn't mean they're just going to accept death, and I don't think they were being stupid about it. President Bacco even
explicitly said that Picard and co could "throw Federation law out the airlock" and expect full pardons. She was willing to give him the
choice. The heroes faced no legal restrictions anymore- Bacco had allowed them the luxury of free choice, all options open.
The Federation places its ideals highly. Now, finally, they had to face on some level the question of whether they valued them more than a chance to seek survival at any cost. And it's not a "give up ideals and live/ don't and die" binary. They fought long and hard to survive. But there comes a point where they have to choose, "do I go for the extreme and survive at any cost, or do I draw the line?". Destiny brought us/them to that point. When La Forge gave his "hell, no" speech (to use one example), he chose the ideals and stayed true to his values. Choosing to do that is risky, because it means that, no, you won't ever be
fully,
100% committed to survival. There will be a point that you won't cross, and that prevents you being entirely attached to life. But excessive attachment to life at the expense of everything else doesn't strike me as a positive trait. Strong, very strong attachment, yes. And usually that's enough for the Federation. But in this case they were up against the 1 in a milliion ultimate danger that had pushed past that, to the point where the usual "very strong attachment" wasn't enough. For the first time, they looked like they needed that 100% to have any chance at all. And in this case, the Federation - as a whole and in the case of each individual - had to choose. And whatever they choose, they lose something. Sometimes, you lose. It's inevitable. Which is the point several people here have been trying to make.
But in this story, there was hope. Hernadez, Dax and the Caeliar managed to use those virtues and values to launch a new form of "attack" and spare everyone the worse of the potential consequences. They didn't all die and they did it by using and affirming their ideals, not throwing them overboard in desperation. For a story that saw our heroes hitting the worst of the worst, "Destiny" was very optimistic - as we expect from our Trek.
Well, that's how I see it.