Alliance could have had a bit of reasonable non-contrived edge if they let Dark Irons stay mostly evil

My understanding is that the Manari, unlike the Sargerei, didn’t know what they are getting into before hand.

As to it being out of character. Velen himself understood what happened to the Orcs. (“Demonic corruption is hard to resist”.). His taking the same attitude to the Manari is plausible.