Why Leo?

Hubristric characters like Leo are very often honorable, moral, and compassionate because they need to be able to connect with the audience. Leo is almost a good person, but his "blind eye" is a huge flaw. I honestly, believe that Leo had more respect than anyone in the Empire. Had Leo stood up for what was right he may have been able to end the war ages ago. He could inspired his men to abandon the empire and lead a coup to stop Gestahl. He could have dealt with Kefka on equal footing. He could've struck down Gestahl before Kefka was given his infusion. He didn't and that's why he's hubristic.

Even though I disagree with aspects of your character interpretation, I have to admit it is refreshing.

The central problem with any interpretation of Leo is that due to the point of view the game uses to tell its story, we as the audience never know enough to make any judgment beyond that of the characters. The Empire is obscured intentionally so we never get more than the vaguest glimpses of its inner workngs. We only get to see it from the perspective of its victims.

For instance, Celes turned traitor. However we are not giving any sort of context or backstory as to what drove her to her decision, or even what she did. The only direct, specific mention of her former deeds comes from Cyan. It's telling that despite Leo and Celes being both generals and perhaps the only two authority figures in the Empire who were arguably decent people, there is no actual on screen interaction between them in the game. Basically, Leo reintroduces her to Locke and that's it; Leo means more to Terra than Celes.

Leo, thus, is a prop, and that's why I have trouble seeing him beyond what the playable characters see him as. I see him more as gullible than proud, and let's face it. Even if he weren't flawed, there's little way for him to escape his bitter fate.

If Leo stood up for what was right before, there's a good chance he'd either be in Celes's position or dead. It's evident a lot of the soldiers serve not out of choice but out of fear, and I don't think Gestahl was a helpess old man. It's clear he's been juicing on some super secret infusions himself; at best, a Leo-led rebellion would inspire others after it failed. At worst, Leo would be used as an example why not to cross Gestahl.