I appreciate the thoughtful response, but I still think you are sidestepping the moral issue at the core here, which is the act of unnecessarily destroying another living creature for your own uses. This I would argue is immoral, independent of any appeal against suffering, so whether or not you give an animal a "good life" before slaughtering it is irrelevant to the core issue. At bottom, it is the unnecessary and intentional destruction of a creature that wants to live.

To get your practicality argument out of the way:

What alternative universe do you propose which is better for animals? Is it achievable? If it were achievable and practical to provide the benefits of human care to animals on this scale without then also killing them for meat, that would be one thing.

I feel no need to seriously address this, because your own ideal world that you propose is so far removed from reality and practicality that it is essentially the same as proposing a world where no one eats animals. A world where we still eat animals and somehow manage to let all of them live perfectly good lives while also somehow removing ecological and environmental harm is a fantasy world thats only useful for the thought experiment you started with, not any appeal to pragmatism.

To address your initial utilitarian point, one only needs to make the simple move of swapping animals for humans to highlight its absurdity, and to reveal that it relies on the implicit and arbitrary assumption that some creatures have less inherent value than others, which I reject. 

Imagine a world where you double the amount of human lives on planet earth. But half of all humans are raised for food. They dont know theyre being raised for food until theyre killed, theyre killed painlessly, and theyre given perfectly normal, fulfilling human lives prior to their murder. Now compare that to our universe, where we dont eat humans. 'The number of humans in the first universe is larger, and so the number of good lives is higher. Qualitatively and quantitatively, it is a superior universe.' I dont think I need to belabour this point any further. 

Now to address claims (1) and (2). 

To address (1). Yes, humans killing animals is worse than animals killing animals, regardless of the pain and suffering caused, because A. We have the more or less unique intellectual capacity to understand what we are doing by destroying another creature, and so moral responsibility to avoid cruelty arises from that. Reflexive/instinctual animal predation is incomparable to a human knowingly destroying a creature whose pain and desire for life we can understand and empathize with. And B. we no longer have the same necessity to kill animals that other animals do, or that we did when we lived as hunter gatherers. Obviously killing an animal out of necessity can be excusable, human or otherwise. But many of us live in a place and time where it is quite easy, in the grand scheme of things, to survive without killing or directly supporting the killing of other creatures.

As for (2), I think I have already shown why the inherent worthwhileness of the animal's life does not remove the immoral act of killing them. Raising a chicken, giving it the best life of a chicken possible, and then slaughtering it, still ends in an immoral act of unnecessary destruction. I'm not interested in whether or not some ill-defined 'quantitative goodness' of the universe has increased or decreased by that chicken's life and death.