Here are some responses (without quote tags).
It all comes down to dialogs, as if I had written a theatrical play, not a mod for a game.
You've written a mod for a mostly singleplayer game that focuses on story as much as- and in some cases, more than- gameplay. The dialogue in a FS campaign has to be believable or the rest of the story falls apart. The rest of the story isn't the problem here- it's that the dialogue is too weak to hold it together. A simple dialogue rewrite (maybe some consulting from the BP team) would work wonders for your campaign.
You cannot see the motive of characters (drive force to raise in ranks, in this case) because you're assuming people will act in the same way as they would today. You are assuming that social relations are static and unchangeable, so it all comes down to something absurd.
No, we're not- at least not to the extent you seem to think. Take the dialogue Spoon posted for example, and your point about the Admiral being an incompetent moron who nobody trusts. You can present that point without making everyone act like a complete dick to everyone else. Maybe a captain or even a pilot would question her motives and competence. A lot more would be said to each other than to her face. But a pilot and an admiral both would not act completely unprofessionally, especially while on flight duty, and ESPECIALLY during an important mission.
For instance, take the mission banter from FS2, mission 3: "I can live with being a pawn if the game makes sense". Beta 2 (IIRC- it was Beta something) questions Command about the coordinates they were given. He all but calls Command an idiot- but here's the thing. He doesn't say that directly. He criticizes Command professionally, not personally, and
implies that Command intentionally let Bosch go. But he only says that
directly to the other pilots, where he's on roughly equal ground.
This isn't something that will be fixed by changing the setting, the plot or what have you, because none of those are the real problem. The characters and dialogue are what make a FS campaign, especially with the BP trend we're in right now, and if you have characters but develop them in such a way that they don't seem believable, that carries over into the rest of the immersion for the campaign.