Well... that kinda gets into the definition of "technically alive", which once you actually start trying to pin it down turns out to be much more of an intuitive "I know it when I see it" distinction than a technical (or even really useful) one.
In the situation as presented (the Scorpion one, not the Hugh one), the Faustian bargain was IMO kinda justified. Destroying 8472 would've been neither justified nor well motivated, since at the time they were only responding to the Borg and not a known threat to others per-se (Harry's inevitable suffering notwithstanding: remember that the Borg were the only "outsiders" they'd encountered up to that point).
I do agree with the posters who said 7 should've stayed more borgified. BOBW and FC kinda left me with the impression that the assimilation process was too invasive for shipboard medical facilities alone to fix. Maybe not full-drone, since they were able to de-gunk Picard a bit in BOBW, but instead just stuck with second-stage implant removal makeup she had at the end of the ep.
But apparently having a pin-up on the crew was way more important than having the show be a bit more intelligent. Given how VOY was written generally, that's really all you'd expect anyway.
Haven't seen the Hugh ep in a long time, so I don't remember the particulars or what all their options really were.