Better that then propping up a system built around tragedy by creating more tragedy.
The simple third solution is this...the coup is the result of them being marginalized to the point to where they want to take over the village. So you let them. Let them be in control. And once they no longer feel backed into the corner, you have all the time in the world to work things out with them. To, like Itachi said, change them from the inside.
But the choices Danzou and the others were making wasn't about what was actually best for the village, it's about maintaining their power at any cost.
That's just it. Even if he had gotten Sasuke to, his stupid plan still wouldn't have worked. As, not only do you have unknown Uchiha's causing greater problems than the Uchiha clan ever did, but the biggest threat currently comes from a DEAD Uchiha. So wiping them out isn't even a guarantee of success.
If Tobi had really been smart, he would have taken those 50 Sharingan's he'd collected, and let Kabuto ressurrect the entire Uchiha clan under their control.