I think I saw a long time ago someone, perhaps one of the CCP content writers, mentioning in an interview that the Gallente Federation is supposed to be like a caricature of a democracy and that players generally tend to take what has been written too seriously. Just look at how corrupted all key people have been, the amount of deception, fraud, etc.
In my interpretation, the description of an average Gallentean as a blue-eyed idealist is supposed to indicate that they are easily deceived by their corrupt system. From this point of view, the atrocities are like a natural part of the landscape. There's nothing wrong with playing a righteous space knight, but I don't see why the concept would really be a defining quality for any of the factions, including the Federation.