The Federation not developing the phased cloak would be like the US not developing the atom bomb.
This is exactly right, and the idea that a commander would attempt to enforce his understanding of a treaty over the direct orders of his lawful superior were just too great a break from reality for me to accept.
His proper course of action would have been to inform his superiors about the conduct of the rouge admiral, and let them decide how to proceed.
Riker would have been court martialed for what he did. We would have never seen him again because he would be in prison from that point forward.