I see the point, but I would differenciate it in another way: In my eyes, in both series we see the same kind of humans: They're smarter, they're more conscientous and they're able to handle more problems to solve than today. Maybe, the characters in DS9 profit from a more character-centric way of writing, but I also see them as a kind of 'evolved humans'.
You used the word 'fairytale' and I also see this, because: In TNG, the humans live in a fairytale land. Yes, there are enemies (like the Borg) and they have their problems, but all in all, TNG shows us the best kind of humanity in the best kind of possible circumstances. In DS9, the situation is changed on many levels: Sisko doesn't lead the flagship of the whole federation, but a space-station, that was left by the Cardassians and that doesn't seem to be as 'brand-new' as the Enterprise-D at the beginning of TNG. While Picard can act the way, his moral compass leads him, Sisko has to make more compromises (e. g. because of the Bajoran politics, like Kai Winn's election).
What I really love, is the way, DS9 shows the costs of this fairytale land, Picard and his crew lives in. Sloan has a very good point: Men like Picard can act like Picard, because Section 31 exists. Ships like the Enterprise can go on their discovery journeys, because they live in a world of peace. This is a very strong way to expand the universe of TNG, but it also depends on TNG: In my eyes, without TNG, DS9 couldn't have been the series it became. So I would say: DS9 is, for me, the better series, but TNG was the nessecary condition for its success.