You are misconstruing my point a bit. It's, if we let you stop evil, we have foreseen that in the future you will lose the safeguards necessary to prevent Evil from returning and winning.
I'd say that even without foreseeing ability, the Muscular Neutral could be justified by anticipating or fearing this outcome. Some people are acting against nuclear weapons even they can't be sure they'll be used ever again. I don't think their uncertainty diminish the justification they have for their actions in their eyes.
But while I slept last night, I had a more fun idea, which was Muscular Neutrality in pursuit of conflict and progression. The idea here is that progress happens in leaps and bounds, and usually as a result of conflicts. Muscular Neutrality keeps two teams going at it, perpetuating an arcane arms race that benefits the rest of the multiverse via harvesting the esoteric techniques and technologies that rise out of such. In this form, Muscular Neutrality is more like a bunch of conspiratorial academics maintaining a project that produces interesting, world-changing items.
Obviously you can poke holes in this. "But why not just work with good?" because this group doesn't think Good will make anything worthwhile unless it's trying to survive evil. But I have to remind you Steam, this is a discussion about how characters in a fantasy world would act. We shouldn't just assume that everyone is perfectly rational all the time, and have to act within the bounds of how people -- be they human or not -- might act, which means factoring in a certain amount of irrationality to any of these factions.
The question wouldn't be "why not work with Good" but "why bother work with Good?" Why would your group even try to work with Good? They would be unaligned on the Good/Evil axis, because they don't value Good-as-defined-by-OP as necessary better or worse than Evil-as-defined-by-OP, because they don't actively want to harm people (that would be Evil), but have no qualm doing it in pursuit of the greater good-in-their-value-set. In their definition, knowledge is above all and they think progresses better under duress, which is something that happened in real life, so it's doesn't break suspension of disbelief to have a group thinking it is the case in their world. An absolute victory of either side would diminish the arm race, so they are perfectly happy with a MAD statu quo, and don't want to work only with one side, because they'd be giving this side the opportunity to eradicate the other side, which would be contrary to their core value to maintain the statu quo.
"Yeah, dear hero, we have given the Evil side a recipe for a plague that will wipe approximately 10% of the Good Faction's population. We know you'll call us Mad Scientists, but you're totally wrong. We aknowledge that losing so many people is a tragedy. I am really sorry for them. But if we don't unleash this plague, think of the consequences: the resulting war will bring us the spells to create continual light spells, and mending closet that will allow everyone to repair anything they own, forever, bringing our society one step forward toward the end of scarcity. It will also remove the need for a lot of industralization, saving the natural world of contamination, pollutants, and a lot of destruction since we won't need to mine areas for rare earths... It will suck for the 10% -- who will have a shortened lifetime, but we don't worry for them to much because they'll just get quicker to their Good afterlife -- but every generation after will get much improved lives, and the need of the many outweigh the need of the few. So our act, despite your short-sighted views, aren't bad. They are enlightened. Now, you die, because sorry but we can't afford to let you live, and there is no possibility I'll just ask my daughter to execute the handsome hero, I'll just do it myself, right now.
presses button. Sheesh, Good heroes, it's always a pain in the ass because they are always whining "why are you so eviiiil"..."