The government will crack down?! To regulate corporations? What government is this? It doesn't matter that pharmaceuticals aren't the same industry; it's a case study of how the private sector's dick is lodged firmly in the government's mouth. Drugs are commonly a matter of life and death, and the FDA is about as vigilant over that industry as a sloth stoned off its ass, so you can imagine where that puts cosmetics on the scale of things. There is nobody watching who cares, except the people, and we don't count. Rest assured, if there is no cheap alternative, the public will be the cosmetics industry's laboratory, the government will keep on sucking away, and independent watchdog organizations will stutter and say, "Uhhh, is anyone seeing this?"
As for the value judgement on makeup, it's hard to achieve any real objectivity on this question, but the way I see it is this: I defend the killing of animals to make fur coats, so I can't very well claim to have a problem with using animals for cosmetics. I refer to the Humean notion that what we refer to as "morals" are derived from our emotional reactions to certain things, which differ according to various factors that define our individual selves.