The freelance angle makes sense...it's just that it still runs into the problem of CONCORD having you dead to rights if they really wanted it. That part actually doesn't make sense to me. I mean Veto probably wouldn't exist if that was the case, same with Naraka, Stillwater, and any other pirate sympathizers you wanna name that I cant think of atm. Being an Empire loyalist is easy CONCORD wouldn't have a huge problem with that since they regulate the empires. They wouldn't have a problem with null groups since they pay taxes. Pirate groups don't do either of those..well maybe indirectly through sale of loot, but i doubt that really counts. So then what's CONCORDS reason for letting them do what they do?
No because actually VETO in that case scenario is nothing more than a group of freelances claiming that they like the Guristas. CONCORD doesn't care. The best VETO will do is to kill other capsuleers, and so their sec status will drop temporarily to prevent them harming the high sec economy by wrecking havoc here, and that's it. And pirate capsuleers shooting other capsuleers stimulate economic production and needs. It's rather nice when people are immortal and you can shoot each other freely without much consequences, damned be the crews, they accepted it in the first place right ?
The only thing that doesn't make sense imo is the possible killing of hundreds DED battleships in nullsec though.
So yeah, I explained basically the 2 schools of thoughts on this (and i'm sure you can find the same for most plot holes), both with their pros and cons. The first one being a lot of handwavium but still not enough because there are inconsistencies left. If done correctly it shouldn't, but the issue is that everyone can make up their own. The second one doesn't have that issue, but faces directly the game inconsistencies and tends to makes loyalist RP a bit absurd... so... vOv
( now we are at it that's maybe part of why people don't play loyalists anymore... )