It seems a tad unhinged and presumably, given what we’re told about the Federation’s moral principles, it violates if not the law then what is traditionally acceptable for a starfleet officer todo. I recall the episode where Worf is court marshalled for firing on what he thought was a civilian transport, I find it hard to believe a policy of deliberately making civilians refugees would fly with Starfleet Command or the civilian government.
It just seems to me to be so disproportionate... Of course President Nixon did have his ‘mad man with the bomb’ theory, that is he believed he could secure peace/diplomatic gains by giving folks the impression that he would actually use nuclear weapons. Sisko of course actually followed through when his bluff was called...
Sisko was unhinged at that time, because what Eddington had done had pushed him to that point. Yes, it was most likely illegal, not to mention morally and/or ethically wrong. I don't think it makes Sisko some kind of tyrant though. One, the Maquis had already attacked a Federation starship (which can be considered an act of war), and have performed terrorist acts in the past. Second, Sisko gave everyone fair warning, and though I wish the crew had protested more than they did, I don't think the show did anything to make it seem like Sisko was the good guy in the situation, more that it was "becoming a bad guy to catch a bad guy".
I think In The Pale Moonlight is a darker, more distinct look at Sisko as a character and his willingness to bend if not break the rules though.
And it is DS9. The show made a habit of taking these idealistic Starfleet characters and putting them in situations that stretched that whole "we're Humans, we're better than this" idea. Mostly, they come out on the right side, but this was a bad one for Sisko.