In my opinion, the firefighting side of VFD's biggest flaw, at least by the time the Baudelaire orphans encountered them, isn't that they're too morally grey in their actions, but that they don't act enough. Sure, in the Sugar Bowl Gen's youth, they were committing all sorts of shady acts, either of their own volition or on the orders of their higher-ups— stealing tea sets, assassinating minor royalty with poison darts, etc. etc. But a few decades later, the old generation had mostly disappeared, and the remaining members of the firefighters were probably so traumatised by the things they did and the things that were done to them, that they decided the best course of action was not to do anything at all.
Instead, like the open eye of their insignia, they watch. They observe, and they collect information, which is fed back into Dewey's sub-library, in the hope of one day, eventually, bringing their enemies to justice. In that way, their organisation became more straightforwardly noble than it was in the past—but also significantly less effective. This weak, toothless version of the firefighters, unwilling to commit the morally dubious actions of their past, staunchly sticking to the moral high ground, is now no match for the firestarters, and is rapidly being destroyed.
They're no help to the Baudelaires, either. It's heavily implied that VFD were closely watching them since the very beginning of their series of unfortunate events, taking photos, writing reports. Surely, at some point, someone could have grabbed them by the ankles and rescued them.
And then, finally, the big day arrives, the day where all their enemies will be brought to justice. Despite being a secret organisation, operating outside the government, the Firefighters put all their hope into the justice system to solve their problems. And when the Baudelaires reveal the truth to them, that the evil of the world is at the very heart of justice itself, they refuse to take their blindfolds off. For once, the organisation with an eye as their insignia, that has done basically nothing but sit back and watch as everything goes wrong, refuses to see. They're just as useless as everyone else.
