Everything you say is true, 2003004219, but I think some of that was the point of the book, you know?
The whole point was that the bad guys are not always bad, and the good guys aren't always good. The books force you to question everything you know about right and wrong, and that's part of the message that they're trying to send, is that right and wrong are not always just stark black and white choices.
Keep in mind how young the Animorphs were. Too young to be thrust into war without it damaging their psyches and, especially, their consciences. At the point when they learned that Hork-Bajir were actual people, not just enemies, for example, they had already killed a bunch of them. And it was easier to just 'dehumanize' them, and keep killing them as if nothing had changed, than to admit to themselves that they had murdered innocent people.
Yes, I believe that more should have been done with the Peace Movement. Yes, I agree that the Peace Movement was composed of strong and courageous people who were heroically able to defy pretty much everything that they were. But I can also see why the Animorphs tried to pretend like the Peace Movement didn't exist. It's just so much easier to see your enemies as all-evil, than to try to make exceptions for the ones you know are not.
I do think you're wrong about one thing, though. You act as though it would have been just as easy to take hostages as to kill, in every case. I think that, if the Animorphs had been so determined to spare their enemies (translation: if Cassie had been the leader rather than Jake), then they would have lost the war. No doubt in my mind about that. Because, in about nine cases out of ten, it was simply not feasible to take hostages. In nine cases out of ten, they had no choice but to either kill the Yeerks, or simply allow them to go on doing what they're doing. There were a handful of situations where they could have taken hostages, and in those cases, perhaps they should have. But they could not have fought a bloodless war. That was simply impossible, especially when they were already so hopelessly outmatched by the Yeerks anyway.