He literally brings up doing it for the sake of the world and how "the energy of the universe is diminishing."
Rewatching it now, and I did misremember, so I'll confess to being wrong on that point. I thought she asked him why he did it, and he replied with the vague "to save the universe", but he actually says (at least in the fansubs I've got)
"Everything we've done has been to extend the lifespan of the universe."
He then says,
"Madoka, do you know the term 'entropy'?" but it's important to keep in mind when dealing with Kyubey that this is a separate statement, and any implication that it relates to the first could be deliberately misleading.
No he doesn't, quote him.
Looking at it again, my memory was a little faulty. On the other hand, what he actually does say seems... downright incoherent.
"Given your population and reproductive rate, it's clear that the amount of emotional energy generated by each individual is greater than the amount expended during its birth and growth." I'm trying to parse some sense out of that sentence, and the only thing I can come up with is that he's implying that there's some sort of conservation of emotional energy that we're violating. Which would imply that he thinks that the human race is a closed system, rather than gaining chemical energy from food.
Is this line clearer in other translations? Or is there some other possible meaning to it that I'm too tired to grasp right now?
Quite the opposite, he says he's hoping mankind will join everyone in the stars one day and uses this as an altruistic appeal to the future of humanity, and he also says in episode ten that he had no idea Gretchen would be so powerful as to destroy the Earth.
"Eventually even you humans will be able to leave this planet and join us." Implies that he thinks this will happen, but not doesn't take any side as to whether this is a positive thing, so it's a bit much to say that he's "hoping" mankind will travel to the stars.
"When that day comes, you wouldn't want to venture out into an empty, desolate universe, right?" Since this is a rhetorical question, it let's him weasel around the "no lying" rule (if it exists), since the universe is not going to be "empty and desolate" when humanity travels into space whether the Incubators are fighting entropy or not. If humanity goes into space, it will have to happen in the next 5 billion years or so (because after the sun expands into a red giant and destroys the Earth, it'll kind of be too late), and that's too short a span of time for there to have been any meaningful progress towards the heat-death of the universe.
"In the long run, this arrangement benefits mankind as well." Implying any benefit for mankind is misleading because they will be extinct within weeks. And Kyubey does know this, because...
"Madoka, someday you will become the greatest of all magical girls, and then the most terrible of all witches." Kyubey knows how big Madoka's potential is, which means he knows how powerful her witch is going to be.
Leaving this conversation in Episode 9 behind and moving on to Episode 10 and Kyubey's response to Gretchen's destruction of the Earth....
"I had predicted that she'd become the most powerful magical girl, but I never would have imagined she'd destroy the Walpurgisnacht with just one shot." Not sure how much meaning we can take out of this line, since one could argue that Kyubey doesn't "imagine" anything. It could also mean that Kyubey knew how powerful she was but didn't think she'd expend all her energy in a single attack (thus causing an immediate witchout). Consider also the follow-up lines:
"And did you know what happened to her as a result?" "It would have happened sooner or later." Nothing in there suggests that he didn't know how big her witch would be.
"Naturally, after that, all that was left was for her to become the most terrible witch." Again, no indication that he didn't know this was coming.
"In this form, I imagine it will only take her around ten days to destroy the entire planet." Wait, I guess Kyubey can imagine things. Unless this is bad translation. You'd think he'd "calculate" the time it would take her to destroy the planet rather than imagining it. And does he literally mean
destroy the planet itself, not just exterminate all life on it? Is she going to chow down on the crust, the mantle and the core? In which case, yeah, throwing the moon at her might just be tossing her a snack.
"Oh well. What happens next is mankind's problem, not ours. We've pretty much met our energy quota at this point." Bunny-cat is a dick.
So yeah, I'm not really seeing anything in there which implies that he didn't know her witch would end humanity.
I'm pretty sure "They're not fucking with stars within visible range of populated worlds so as to facilitate the evolution of a maximum amount of emotional life-forms" is a perfectly valid explanation.
But I don't see how fucking with stars in systems without habitable planets would prevent the evolution of emotional life-forms in the ones with habitable planets. Again, that's a lot of energy that's wasted where no living creature will benefit from it. And I don't think that it will interfere with their contracts, because even if a species notices that interstellar hydrogen is going missing and there's a lot of weird infrared where stars should be that could be Dyson spheres, no one's going to associate that with Kyubey. He usually allows people to assume that he's a supernatural creature rather than an alien, and doesn't go around talking about the entropy thing most of the time, so people aren't going to go "Oh my god, bunny-cat is making the stars go out!" Hell, with some misleading phrasing, he could make them think that it's being caused by the monsters he wants them to fight and turn it into a recruiting tool.
Maybe, but we've seen real world weapons, not just magic, can be devastating to witches.
Normally, yeah, mundane weapons can kill witches. But then you have Walpurgisnacht, which is somehow able to shrug off dozens of anti-tank rockets, several anti-ship missiles, and a stadium full of explosives, which should have been more than enough to destroy any normal target its size. How is this possible? No idea. Could be some sort of magical damage resistance that only magic can overcome, or it could be that Walpy is just far tougher than one would assume, regardless of whether magic or mundane weapons are used. And Gretchen is way, way stronger than Walpy. We have no idea what it can withstand.