This episode from s7 comes after s5 The First Duty where Wesley got the whole "The First Duty" speech from Picard for his part in the Coverup for the attempted Kolvoord Starburst manuever and subsequent death of their teammate.
http://www.youtube.com/watch?v=8W0ff2Xns5g
"The first duty of every Starfleet officer is to the truth, whether it's scientific truth or historical truth or personal truth! It is the guiding principle on which Starfleet is based. And if you can't find it within yourself to stand up and tell the truth about what happened, you don't deserve to wear that uniform!"
Notice that Picard didn't merely tell the Romulans and then let things play out, he placed Admiral Pressman (and Commander Riker) under arrest at the end for violating the Treaty of Algeron.
Decision made by that renowned jurist and Federation legal scholar, Jen-Luc Picard. Uh huh.
I notice it, I just don't see his authority to do it, in addition to not recognizing his qualifications to interpret the treaty. Who the hell is Picard to interpret the legality of Federation treaties, especially as regards his superiors? This was for the Federation Council--the civilian government--to decide.
Picard must have been watching TOS, he was mavericking like Kirk.