I believe Wing Commander III is a lot smarter than most people think. There's a tendency to push it as "it's just a video game, of course you nuke the bad guys!" and I don't think that's really the case at all. At the risk of sounding like a huge dork, Wing Commander III is a much more complex piece of art than people recognize.
To this point: the game's story absolutely intends for you to know that what you're doing is wrong and it also wants to manipulate you into feeling that's the only choice. We are told again and again that it's an immoral thing: Blair is disgusted with Tolwyn attacking Kilrah without warning, Vagabond tells us about how Dr. Severin murdered /millions of people/ making the bomb. We're told that Confed is lying to us about civilians being present on Hyperion. You aren't uniformed and you aren't being set up to beat a boss battle and feel good about it.
At the same time, it dares you to do it. There are so many beats put there for this reason: the Kilrathi are using similarly immoral bioweapons! Earth will lose the war! They've killed your girlfriend! Your friend Paladin says it's okay! It's not a coincidence that all of these elements of the story are set up in the intro and then come into play in act 3. The whole game is trying to get you to say uncle; this is wrong but you still have to do it.
There's an absolutely wrongheaded idea that Wing Commander I and II are brilliant and Wing Commander III is cheap because they went Hollywood and attracted a bigger audience in the process. That's objectively not true! They spent money on real actors and writers to tell a more complex, structured story and they did… exactly that.
(Wing Commander III's references to the atomic bomb project aren't just the Death Star; it comes from the fact that Borst and De Palma were native New Mexicans who had a particular relationship with the bomb… and that shows pretty clearly in the text. Vagabond's story about Severin killing the Paxans to develop the weapon is specifically adapting the experience of the Downwinders… which is an element left out by less complex works like, say, Nolan's Oppenheimer.)
Was it genocide? Not really at least no more so than the A Bomb attacks during WW2. The Japanese people, as a race, were not wiped out in those attacks but it was a massive hit to their population. The Kilrathi, likewise, were spread out far enough within the galaxy that they would not die out as a race. The main difference is that the Kilrathi venerated their home world far more than the Japanese venerated their islands so that is the main ideological punch that comes with that attack. Even after Hiroshima and Nagasaki were destroyed there were many Japanese, both civilian and military, that wanted to carry on the fight regardless. That's where the disconnect lies between these two events.
I don't think this is the right interpretation of genocide. It's not slaughtering every single person in a particular group, it's intentionally working to destroy a culture (successfully or not) and killing a lot of people in the process. Kilrah is a more clear cut example of genocide because there's a clear intent to wipe out the basis for Kilrathi culture. That's part of a very different end goal but that's the case with any genocide. Paladin knows that he's wiping out their entire political apparatus, the core of their religion and billions of civilians and he's doing all that on purpose to end the war. (The atomic bombings are a little looser here; it's pretty clear the planners were treating it like a bigger bombing raid. The target committee believed they chose Hiroshima and the other sites for their specific contributions to the war and they specifically removed Kyoto as a target because of the potential for doing more damage to Japan's culture.)
I actually think the ending of Wing Commander III is significantly less morally questionable than the use of the atomic bombs in World War II.
In WC3, the Confederation is on the brink of total defeat. We know what happens to species conquered by the Kilrathi. Surrender isn’t an option; it would mean the end of humanity. The final mission destroys Kilrah, killing the Emperor, the military command, and presumably billions of civilians. It’s horrific—but the trade is clear: the lives of those civilians for the survival of every human and the freedom of countless more across hundreds of worlds. It’s a last-ditch act of total war, driven by existential necessity.
Compare that to Hiroshima and Nagasaki. The justification given was to “save lives” by avoiding a land invasion of Japan—but this meant killing tens of thousands of civilians to spare combatants. That’s a very different moral equation. Moreover, it’s now widely understood that Japan was already close to surrender, especially if the US had guaranteed the Emperor’s position. The atomic bombings weren’t a desperate final move—they were a demonstration of power, aimed at securing geopolitical advantage in the postwar world, particularly in relation to the Soviet Union.
On a scale that large weapons of mass destruction aren’t inherently unjustifiable, they have to be weighed against the alternatives. With the destruction of Kilrah, the alternative was extinction. In WW2, it was arguably a negotiated surrender. One act ended a war humanity couldn’t win. The other ended a war Japan had already lost.
That's the genius of it, though: everything Wing Commander III tells us about why the bombing was necessary is exactly what was told to Americans in 1945 and what was taught to Americans for generations (and probably still is). The Kilrathi are monsters who would do the same thing if they could! It saved hundreds of times as many lives! There would've been a horrible invasion otherwise! Think of the long term geopolitics! And so on. And the game wants you to question if it's true even in the moment (especially when you have the newsbriefs that are written to confirm Rollins and Vagabond's claims that Confed is lying about everything!). It just confuses people because it doesn't give you a final answer... and it doesn't do that because there isn't one.
To that end, what I think matters is the next story and the one after that and honestly I think Wing Commander does an okay job there (and could do even better with more stories). We get Blair tortured by what he had to do in Wing Commander IV... and then in Wing Commander Prophecy we find out that destroying Kilrah is also what signaled the next, worse enemy to appear. That's a pretty neat take on the long term effects of the real bombing helping to define the Cold War instead of scaring the Russians as was intended!