They were put in charge of the Police Force and chose to interpret it as being ostracized. Not sure how being in charge of military police is ostracization and if they felt that way, they could have simply refused the offer. Instead they kept the title and the perks it brought while still plotting rebellion.
The Uchiha would have visited war and tragedy on others and as a result they were killed. That is what happens in war when you attempt to overthrow a government. Having said that, genocide was not the answer but neither was Sasuke's response. You can't claim killing all those Uchiha because of what their leaders plotted is wrong but then try and argue that Sasuke killing people in response is justified. Both sides were responding to aggression and both sides responded incorrectly.
The difference is Itachi did what he thought was right and was not a whiny baby about it while Sasuke whined about it for much of the series. In addition, Itachi ultimately succeeded in his mission while Sasuke failed so in the end Itachi is the best Uchiha as he succeeded in his mission. By contrast Sasuke got his ass handed to him by Naruto in the end and then had to live and watch Naruto become Hokage and maintain the very power structure that he sought to destroy. Itachi won.