Trekkie nailed it. Based on that episode, and what had come before it, (and by extension, the information Picard and co had to work with), there was no morally sound reason not to wipe out the Borg in a single bloodless move.
You mean like the trillions of innocent lives from countless civilizations the Borg had already assimilated? Information of dozens of worlds the Federation has never seen? Or how about the technological advancements they could get from Borg technology?
This is a better argument than any ridiculous bromide about genocide just being wrong. But, as Trekkie pointed out, saving the lives would not have been an assumed benefit at the time. And, there would likely be plenty of information/technology to plunder from dead Borg. The Federation could have wiped out the Borg and still come out ahead technologically. (They would even had had an advantage over the Romulans and Klingons, who would not have known to go tech-hunting as quickly as the Federation would have.)
From a writing angle, there were also possibilities. The Federation's plan could have killed 90% of the Borg, leaving a small group of hyper-adaptive (and individualized survivors. Mix the Borg with a desire for revenge or avarice, and a capacity for creativity.
Instead, we got typically fuzzy Trek ethics where the moral high-ground is presented as being the most absurd of the available choices.
Dom
-not a fan of Card.