Big if true, but...
I don't 100% get the 'race in Mystic Ruins' bit. Do the Chao races take place in the ruins? I'm kinda lost :p
Biggest issue is that Chaos stops after seeing the Chao and listening to Tikal. You would've assumed he would've still gone on a rampage even after that. I think what happened was he thought all the Chao were dead after the echidna tribe attacked. I don't think he ever saw a Chao after that until after Super Sonic defeated him, so the flooding of Station Square was at least somewhat not 100% in good reason. Also, the Mystic Ruins egg isn't confirmed to have been put there by people, the echidna tribe could be the violators.
I do agree though, the Chao aren't 100% in the best conditions, with the hotel treating them more as toys than living creatures, but it's possible the hotel does treat Chao life with respect since we never see what goes on normally in its daily routine. The Egg Carrier and shop eggs however have no reason to be there.
(Don't know about the Chao being murdered and abused bit, that part is 100% on the player)
As for SA2, we don't even know if the Chao garden is canon. In SA1, the Chao did play an important role in the end, and in-game characters (hotel man for example) do reference the Chao, but there's nothing of the sort in SA2. The garden doesn't even look like it belongs on the main hub map, the closest thing to Chao being mentioned in-game are the Artificial Chaos enemies.
The black market bit is also a bit shaky, because (assuming we're using the Dreamcast edition) the black market exists outside of the game.
It's all a big mess that mainly relies on assumptions and ethics.
(P.S., did you try the SA1 black market? How did it go? What were the steps?)
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