The animorphs did believe open war would end in the yeerks defeat for most of the series. Going by what the characters believed, open war was a favorable, if costly outcome. It probably helped this mindset that Ax told them the seablade could be destroyed by the combined combat power of Earth's military. Again, they did try once to take a bug fighter and give it to the government and expose the yeerk invasion.
BUT, whether it would be a good thing or bad thing, it still makes sense to be ready for it. If the military could reverse engineer some of the tech, then it would have been huge. If all they could do was understand the capabilities so they knew how to fight when the time came, that'd still be a great advantage.
Maybe they kept the morph capable hosts in special cells, or kept them unconscious while they didn't have a yeerk?
I'm betting it took so long for V3 to figure out they were human because he put andalites on a pedestal. Only a highly trained group of andalites could be that damaging to his plans. I think when they finally analyzed the DNA it kinda made it impossible to say otherwise. I don't remember if it said they began analyzing the DNA before or after they thought the anis were human. And there's always the possibility someone went ahead and did it on their own then told V3 about it.
They refused to killed Visser Three for that very reason--they feared that there would be a much bigger threat. Better the enemy you know, and all that.
Yeah, but they go back and forth on that so much. They had at least 1 mission where the only intent was to kill V3.