Every situation after Toady's look at the problem will be better than now. We can have different opinions about ideal one - your is a bit casual, mine is a bit hardcore, but both looks satisfying for me. And current situation is not.
I don't see myself as casual gamer but as a hardcore simulationist (GNS Theory), as a simulationist I prioritise the integrity of the simulation over "arcadey" challenges but I would still enjoy DF having challenges and I would love for the game to respond to my characters action to the point that if I go around slaughtering whole villagers that they eventually send the army after me, at first a squad or two but up to hundred's of men if my reputation/threat warrants it.
I'm fine with the game giving me an outright/literally unwinnable scenario if that scenario emerges from the games simulation but would hate such a scenario as "just" a survive as long as you can DF Hardcore/Rouge-like challenge mode thing, players can already set that up with modding and world gen options without altering the background simulation at all.
I see you as a hardcore gamist (GNS Theory), you seem too (IMHO) view DF's simulationist nature as a means to and ends (challenging gameplay) I see the simulation as the ends in and of itself, plus I really want to be able to play as just a farmer, building my house, raising my live stock... basically star dew valley but with more simulation and the chance to be eaten by wolves or a dragon, or as a human blacksmith who searching for the secret of dwarven steel, a combat oriented adventure is the least interesting long term possibility IMHO.
Note: I think Toady One is approaching DF from a Narrativist perspective given his focus on allowing engaging stories.
I get what you mean about a moral system being more realistic but this really is not the issue here. The problem is that villagers don't react at all when you kill their mates right in front of them and even say stuff like "good to see you", let alone fight back. Maybe the old system wasn't realistic but certainly more realistic then the buggy one we got now and it was certainly a lot more engaging when you had to actually deal with consequences for killing or attacking someone.
I agree that the current situation is not ideal but I see it as a stepping stone on the road too the future and I would rather tolerate what is the new normal then regress back to what was just so that combat in/with villages is more engaging, I definitely think this is something to be fixed before the next big wait.
I would suggest that Toady use the artefact hunters ability to track the player and the new villain groups together so that they can work as a reaction to the player, the "villainous" plot is to kill the PC and involves convincing the king/law maker that the PC is a threat worthy of dispatching the army, at which point the army tracks the player and now you have to deal with a hundred soldiers hunting you down as a consequence of going on a murder spree, I think this would be a lot better quick fix then simply reinstating the previous system.