That's a fascinating idea, and a great use of Matrix technology. I'm a bit surprised that it's Five who's doing this, but otoh, the only Doctor who I could really see tackling the problem this way is Seven. And that would've been a very different moral discussion. One of the many reasons the audio "Master" sucks is that it avoids this discussion, when of all Doctors to have it, Seven is the one who comes closest to the Master's POV (if the Master is indeed immoral and believes that the end justifies the means). And maybe Eleven. I'm starting to have my suspicions about Eleven, but Eleven wouldn't be having this discussion either - he'd fix the Master straight away.

Incidentally, I love the idea of post-first murder Master, running around in a panicked axe-murderer daze a la Crime and Punishment :D