1) The Wraith are predators, plain and simple. They hunt and feed off humans, exclusively. They're not going to be changing their nature any time in the future, so...it's a simple survival equation: them, or humans. Period, paragraph. There's no room for 'let's all live together'. They won't do it--they can't do it. It simply isn't in their nature. And, as I pointed out before, their nature isn't going to be changing. It's that tiger hunting us in the forest: we either come up with a damn clever way to get to it first, or we're human hash. Tigers don't change their stripes. They are what they are.
2) Traditionally (and I say that due to current events which have gone counter to our past policy,) the United States has a public ethic of "no preemptive strikes", meaning, we don't go out and kill other people just so they can't harm us in some future scenario. We use sanctions, we create scenarios in which the other people are put in untenable situations to force their hand, we put them in jails to contain their behavior, etc...but we don't condone outright preemptive murder as a valid and ethical solution to events that haven't taken place.
But--as I pointed out in #1, it's a certainty the Wraith are going to hunt and kill, not a possibility. The Wraith don't have a choice. So, taking action is a necessary thing. The SGA have killed their share of Wraith already, when they've clashed in chance meetings or in combat. It's not like there's this big "oh, the poor Wraith" sentiment that's happening. And yet, to be true to our highest beliefs, the SGA tried to utilize a method that would create that 'let's all live together' sentiment: the retrovirus. In one fell swoop, it rids us of our very deadly predator, and avoids killing. A dream answer come true!
But of course, it isn't. It doesn't quite work right, there's big holes in the scenario. Mainly: without a daily dose, they revert. And now we have evidence that memory can return even with the daily dosing. With Michael, they tried a second time to avoid an outright murder (and this time, of a being who, for whatever its own reasons were, did help us) and gave Michael the drug again, desperate to find some sense of humanity's best nature in their actions and avoid murdering him. But the universe keeps conspiring to teach them the very stark lesson that, in the end, it's all about survival, not ethics, and, at that moment in time, they can't afford to keep trying to find a way around that fact.
(Because, in the end, ethics do very little for a race that's wiped out of existence, n'est-ce pas? )
So what does that tell us? It certainly tells me that a Wraith is a Wraith is a Wraith. Even forcibly stripped of the genetic material that makes it physically a Wraith, its nature is still there, still active...and will come to the fore at the first opportunity. So while Atlantis had a good idea in Carson's retrovirus as a way to try to take the High Road of survival, ultimately? There is no high road; there is only survival.
In that case, using the retrovirus is like using any other weapon in one's arsenal. The humans used it on board the hive ship to create a chance at survival for themselves, and it worked. They attempted to give the created humans a chance, continuing to give them the drug that would keep them from reverting to what they fundamentally are, but that attempt didn't work. If that unknown hive ship had not been bearing down on the planet and thereby threatening all human life in a second galaxy (Earth's) if they were to find Michael and have access to his knowledge, then leaving the Wraith/humans there on that planet, with no way off, at the mercy of their own natures, would be as valid and as morally high a choice that could be made. But the hive ship was coming, Michael did have knowledge we couldn't afford to let survive, and Sheppard made the only valid decision: kill them all while they had a chance left.
I don't understand all the angst about these decisions. Yes, the Atlanteans were put in an untenable position and had to make one hard choice after another, concerning the ethic of killing. They kept putting themselves in more danger than they would have been in if they'd simply killed the Wraith outright when they found them incapacitated and changed. But in the end, I don't think their choices were ethically bad. Trying for the high road, while certainly overly optimistic and naive, certainly couldn't be unethical. And in the end, survival can't be called unethical either.
ETA: I can't help reccing lydiabell's wonderfully insightful post on Sheppard's behavior in the recent episode. Go to her LJ and read.