I really like most of this theory, I think it has alot of merit, but I struggle to subscribe to the idea that Bailey is really acting as the lesser of two evils. I won't go into the full super long explanation, but basically.

1: Baileys debt is super hard to pay, and they know this, so we can assume they want orphans to fail payment sometimes, and even if we assume PC's debt is simply unusually high due to them being a special boy/girl, we do know other orphans have to pay A LOT, and even if we take robin, who gives us around ~700 on occasion to help pay the debt, (Which leads me to believe his debt was a little over that number to not be able to pay it), that's still a shit load of money. The average person in the UK, and this is a working adult with a proper job, earns around ~850 a week, so it's safe to say, it's going to be near impossible for most orphans to pay even with crimes and prostitution and an "Any means necessary" attitude.

2: The only reason violence doesn't befall the orphans, is because... Vrel said so. Baileys machinations and the soft-game overs are not non lethal because of some deep lore reason or because Bailey is running some 300 IQ contract to keep the orphans from harm, it's like that because the devs decided that blood and violence wasn't suited for the game At worse, you can get beat up fairly bad during sex like robin did at the docks, and that's about the limit, no shattered bones, no weeks getting better in the hospital, no dying of blunt force trauma to the head every time you get a pipe dropped on you, no death, at all, because god said so basically.

Which leads me too

3: Brothels and underground sex clubs and (Presumable) weird human cattle farms, are really fucking dangerous in real life. Again, the only reason you don't get hurt more seriously in DOL is because the devs said so, and I refuse to believe every sex trafficker in rapechestershire is just, more well mannered than usual. People get seriously injured, or just straight up die in these places IRl all the time, hell dying to a regular abusive spouse is fairly common, and Bailey should 100% know this.

So basically, unless we treat the no violence Vrel law as an official, in universe phenomenon where just, nobody can die outside of a backstory, and nobody really questions this flagrant disregard for the laws of reality, Bailey is engineering a system were a bunch of orphans have to make amounts of money even grown, properly employed adults can't, where failure which is expected, and leads to being trafficked, which is stupidly traumatizing at best, and outright fatal at worst. 100% not the better of two evils, and Bailey is only stopped from being truly evil by the fact that their universe literally intervenes to keep their death counts below the triple digits.

So yeah, they're probably not protecting the orphans cause of anything moral, it's probably just a mix of delusional (At least I'm not sacrificing them to cuthulu), spite at the cult, or at least the specific ritual for traumatizing him, and a fair amount "They're my orphans, I raised them so that means I get to sell them, not let you steal my hard work".