How do we know it hurt no one? People who go to such lengths to hide the truth generally don't have benevolent motives for it. How do we know the Paxans were only motivated by isolationism? We only have their word for that, and they're a people willing to kill to keep their secrets, so we can't exactly assume they were being forthright about their motives. What if they had some more insidious reason for hiding?
Then they should have *mentioned* those reasons. As it stands, there's no reason to assume the Paxans are anything other than flat-out xenophobic and paranoid; Picard is certainly not obligated to sacrifice himself, his crew and his ship to satisfy that.
You're totally missing my point. And you're getting the burden of proof absolutely backward. The Paxans made it clear that they were willing to kill a thousand people to keep their secrets. You don't assume that people like that are harmless in the absence of evidence to the contrary. Their very willingness to commit mass murder is solid evidence that they aren't harmless. As an officer sworn to protect the Federation from potential threats, Picard had a military duty to ensure the Federation was aware of the existence of this powerful, murderous race whose motives were unknown -- just in case they were lying about their motives. It's called erring on the side of caution.
And you're still totally, profoundly missing the deeper point. Star Trek is not just about people trying not to die. It's about people who stand for something. ST stories should have some deeper meaning to them, some moral or philosophical point. The only point of this story was "Gee, here's a mystery, let's solve it," and it came across conveying the probably uninintentional but very shallow and nihilistic message that "The truth doesn't matter and it's okay to destroy evidence if it suits your immediate self-interest." That's a horrible message. It goes against every principle of science, every principle of justice and integrity -- every principle that has defined Star Trek from its inception. The story made Picard betray everything he believed in for the sake of simply continuing to breathe, and it didn't even have him acknowledge that sacrifice. You keep dwelling on the mechanics of the situation as if that were all there was to it. But the fact that there was nothing more to it in the minds of the writers is exactly the problem with the episode.