Correction: The individual members of the Alliance who did directly brutalize the orcs are responsible for their choices. Even then, it primarily comes down to Blackmoore for leading the camps, and Terenas and Arthas for giving him too much leeway.
You’re incorrectly assuming that the Alliance would have known or should have known this at the time, simply because we the players know it in hindsight. Even Antonidas doesn’t start forming his theory on the orcs’ withdrawal from felblood until shortly prior to the Third War (he introduces it in the novel Arthas).
Putting an invading army to death after they’ve burned, looted, pillaged, and murdered all over your nation isn’t on the same level as committing genocide against a helpless population.
I agree, the fault lies primarily with Blackmoore and Terenas, for the reasons listed above.
Oh, it definitely should have been denounced within the Alliance of Lordaeron; the rampant xenophobia is one of the primary reasons it fell apart, even before the Scourge destroyed each nation one by one.