Signs are BAD. Whatever they are doing, it will not turn out well for us.
Main question we face is whether we can actually go diplomatic route with them and turn them into real ally. From what I can see - it's very doubtful. They do personify all worst traits of Salarian. Amoral. Deceitful. And backstabbing.
They have already become a problem, and one that will only grow bigger more time will pass.
The best move may be to just crush them here and now, when we still have advantage - because we will lose it in future. They are NOT fighting Rachni. They are NOT helping. It allows them to grow without strain that war places on us. And we know that the first moment they are strong enough, they will try to put pressure on us and start to demand things.
My proposition:
INTERNAL: full disclosure of Lystheni crimes.
- covertly building fleet when Virmire is bleeding to stop Rachni
- theft of ship design
- espionage operations
- violation of established borders, and theft of prothean technology
General rethorics, of Lystheni using Virmine blood and goodwill to spy, undermine and actively work against Virmire interests. Play on emotions, on betrayal, and portray them as backstabbing, deceitfull bastards (which is basically true)
EXTRERNAL: crush them via military action
- no negotiation, no warning
- seizure of facility
- 'Blitz war'. Use as much as possible at all to spare - gain owerwhelming advantage and crush them.
FUTURE
- establish less totalitarian and more open goverment
- tighten ties and start trade full-bore
- get goodwill of population by actually giving them better lives (I doubt they have that now, hobbled by paranoia and restrictions placed by paranoia. Plus whatever is happening with population within facility is likely horrifying)
Edit: spelling.