Where the incoherence kicks in is in trying to turn this framework for labelling people's beliefs and outlook into a scheme of social and metaphysical truth. For instance, once we say that the Seven Heavens is, per se, a LG place, we are stipulating that it is true that social order can maximise human wellbeing. Yet, at the very same time, we define Olympus as, per se, a CG place, thereby stipulating that it is true that the best route to human wellbeing can be self-realisation largely free of social constraint.
Why is this incoherent since we are not stating that either has been proven to be 100% true... all we are stating is that the possibility exists that social order
can maximise human well being and that the posibility exists that the best route to well being
can be self-realisation largely free of social constraint... of course neither of these planes is the entirety of the multiverse (And thus all of humanity) so neither is a truth that has been proven out 100%...
The same thing happens when we label nations as LG, CG etc - we imply that they successfully give effect to their alignment beliefs, although each of LG and CG involves a denial of the other.
I don't follow... in labeling a nation all we say is that for this specific group of individuals the society labelled with this alignment exists... how in simply labeling a kingdom with a certain alignment (usually, though not always, based on the moral outlook of it's rulers) are we in any way implying that they are "successfully" giving effect to their alignment beliefs? If anything all we are saying is that this kingdom has the potential... or not... to successfully implement their alignment beliefs... but unless said kingdom rules the entire world and in fact brings about well being for all... nothing has been proven and it exists in a state of possibility...
I don't know what exactly Gygax intended with his outer planar sceme - did he mean that Olympus is populated by people who have the CG outlook (seems feasible) or that Olympus is a place where the claims of CG people are true (seems uttery infeasible when generalised, as I've just argued)?
Gygay states in the 1e DMG... "However, the "outer
planes" show various alignments. This is because they are home to
creatures who are of like general alignment."
But it's the second approach that is picked up in Planescape and has continued since, and that is what produces the incoherence. A similar question - are devils happy or miserable? Gygax's Appendix IV leaves it open that devils are miserable, because in fact wellbeing is a real thing and living in a place where the most powerful people don't care about others' wellbeing would be horrible. But Planescape and onwards present a realm where the devils are happy with their situation ie where wellbeing is being created. This is incoherent - if the Nine Hells succeed in generating wellbeing via harsh discipline then they show the truth of (a particular view within) LG, not LE!
I think you're off in your view of Planescape, at least as I understand it... the multiverse is a consensus reality... which means that Olympus is what the consensus of the multiverse (not just inhabitants of Olympus) believe it to be at the start state of the campaign setting. You seem to be treating Olympus as some kind of isolated pocket dimension that is only shaped by those who reside in it and thus must be "true", but as I understand PS, this is wrong.
To touch on your comment about Devil's... Devil's don't value well being...
from the 1e DMG...
"Evil, on the other hand, does not concern itself with rights or
happiness; purpose is the determinant."
LAWFUL EVIL: Obviously, all order is not good, nor are all laws beneficial.
Lawful evil creatures consider order as the means by which each group is
properly placed in the cosmos, from lowest to highest, strongest first,
weakest last. Good is seen as an excuse to promote the mediocrity of the
whole and suppress the better and more capable, while lawful evilness
allows each group to structure itself and fix its place as compared to
others, serving the stronger but being served by the weaker."
Evil cares nothing for well being...So I guess in the sense that Devil's want a place where proper place from weakest to strongest is enforced and the weaker server the stronger... then yes they would be "happy" (not sure I would use this word but you chose it)... but as stated by Gygax well being isn't a consideration in that "happiness" whatsoever.