What if a job was created in which humans would acquire and then morph into Yeerks to enter the heads of the human accused and figure out what really happened? Again, there are all sorts of potential abuses of power that could occur, but humans might be more comfortable with the idea of being momentarily controlled by other humans rather than Yeerks, who have so much to gain from a host body.
But back to the morality of this issue, I think it's grey at best. I believe Chad's concern about how hosting only the most scummy of human bodies might be hazardous to the human race is valid. The Yeerks' system of morality is divergent enough from humans' and Andalites', as it is. Who's to say they're right or wrong for using others as host bodies, within their own system of morality? If the humans and Andalites are attempting to integrate Yeerks into peaceful galactic society through moral imperialism -- which, it looks like they are trying to do by the end of the series -- they should be very careful what they let them learn. The moral ambiguity of these actions on the humans' part is already questionable; humans have been flirting with imperialism for a while now, but are starting to see its negative consequences.
As far as using criminal bodies for hosts, human morality has tended to agree in recent history that absolute slavery is not okay. For the Yeerks, enslaving other species is completely natural. If, however, they're forced to live by human standards of right and wrong, I agree with Anijen: it's as if we're enslaving criminals and the Yeerks who control them.