The Elves lost when their Snow Prince had fallen. Everyone knew this. No more fighting had to be had. And don't try to tell me it was the Dwemer that killed of the Snow Elves, if the Atmorans didn't kill off over 50% of their species to begin with, they wouldn't have had to go to the Dwemer at all.
And instead of helping the snow elves, they enslaved and poisoned them and turned them into the monsters they are now. That's pretty low, lower than meeting them on the battlefield, which is what Ysgramor did.
And I guess the Atmorans did not trust the snow elves at all. In the case of world war II, we realised that it was because the Nazis had taken hold of the government and the blame could not be attributed to just being German.
In the case of the snow elves, it was because their very existence was a threat to the Atmorans. I don't think they knew it was about the Eye of Magnus, they just knew that the snow elves could not be trusted. Not one of them. Therefore not one could be left to live in Skyrim.
Ysgramor did what had to be done to ensure the survival of humanity, or at least what he believed needed to be done. Not out of greed or bloodlust (well, maybe a little bloodlust, because every Nord loves battle) but mainly out of survival.
Therefore he's a true Nordic hero.