I think the key to understanding Lehm's "monstrous" behavior is this.
(Let's use a non-government example)
Surely everyone wants to solve cancer, or have a car that runs on a renewable energy source. But if you invented say an easy method of controlling cancer (say, an exercise and diet method) or some source of energy that is so easy that it's a wonder that people haven't invented it before (in pretty muchevery case of someone researching cold fusion or perpetual motion, they pretty much committed career suicide), these are to do with the problem of having competition with the current system, since in the above method of cancer cure they aren't making money, and in the other case either it is effective and marketable, or it isn't. These are not competing technologies, they are new ideas (right or wrong) that change the status quo.
Whenever you expose something fishy about a system, those who are part of the old system go into denial mode and those who knew about it will create violence. Is this truth worth it?
The answer is a reluctant yes. We know that the Nazi system, most of the people were in the dark about gas chambers. This is what happens when people support a system that doesn't tell the whole truth.
Now, here's point. Yes, Lehm made actual physical monsters. Yes, Lehm's truth ruined lives (think about Maytag, wanting to compete in the contest, suddenly finding herself out of luck, with no knowledge of how she got there, and possibly with mutant limbs or something). Yes, Lehm possibly helped get rid of most of the leaders of a magical city, but making a super-mage.
But... we currently have a government where healers can treat for free, only because of oppressively high taxes, and a criminal magical government that has actually killed people and messed with their minds to such a point where they can't even be sure what they saw was real. It in fact looked like half the room was under a mind fog spell. We have a police force that, given what we know of this system, probably quietly gets rid of people even those who pay their taxes, who don't particularly believe in magic. Lehm is trying to expose magic. Thing of the implications of this for a second, that he has to hide his lair, because the system is such that there were probably other eccentrics around but they all got arrested, even before the crime of creating monsters.
Now on the other end, we have equally dystopic nation where people seem to have the right to do whatever, so long as it doesn't coerce or hurt another, but as we saw, an outsider like Bern is able to become desperate for medical treatment and have no money no options. When she tries to make them , she winds up fighting for her life to entertain people, and cheating on her lover to get out of the system. And after all of that, they don't keep their bargain and try to rope her in for more time.
These are the truth of the governments of Maytag and Bern's world. Exposing that such things are controlled by a system that isn't even real will unseat the ruling class, and cause violence and instability. But peace at the cost of ignorance ceases to be worthy when it causes needless deaths every day. The same system that creates the Qualia can create someone who has a healing factor and doesn't need to die. But it doesn't. Instead magic is used largely for commercial and security reasons.
