Great post - very thought-provoking and reasonable.
Can we really reduce the (in-game) intractibility of the Mage-Templar conflict to a difference over means? To my understanding, part of the issue is a difference in objectives. Certainly, there are those within the Chantry, Templar, and Circles who see the issue as you outline it: as a beneficial bargain that protects both Mages and non-Mages from the possible negative consequences of magic.
But there are also those on all sides who hold a much more negative view of magic, and see the Circle system in more punative terms. For these individuals, the Circle system provides the benefits you outlined, but it also serves to punish mages for their crimes against the Maker. For these individuals, the appeal of the Circle system is that it provides a way of containing the mage threat and disciplining mages without requiring constant war with magic.
The bigger question, and one that I imagine will be dealt with at least a bit in DA:I, is how to deal with those who see the Circle system as a punitive measure, rather than a protective one.
Probably a mixture of the classics: some concessions (the Mages could get far if they demanded a public admission of guilt from the Templars and Chantry for the Kirkwall Annulment, which then serves as a acknowledgement of a need for Templar restrictions going forward), some compromises (establishing new rules of conduct, new oversights), sprinkled with some crushing (killing or marginalizing hardliners on both sides who oppose such compromises and concessions).
You are right, though, that there is going to be a difference of objectives in what people feel the system should be, and I apologize if I implied otherwise. The analysis at the start wasn't to describe what everyone's objectives were or even should be- it was simply an analysis of the systemic goals of the Circle system as it stands.
There's nothing intrinsic about it you have to be defined by. It's obvious for mages/pro-mages, many of whom don't care so much about the risk of a rising mage class, and who simply settle for reacting to public mage abuses/abomination outbreaks rather than take proactive measures needed to prevent them from being public. They may also think that some of those incidental boons of the system (non-magical education, living standards, political organization) should be goals of the next system: I remember one poster who in the past argued that people should pay taxes and tithes to the mages to support an upper class life so that the mages would not face the stresses of being poor and thus not be tempted by demons or blood magic to get wealth and material comfort.
But even the Templars and Chantry don't need to accept the status quo system as it was. A pillar I neglected to mention but was part of the initial cause for the Circle, for example, was allowing mages relative freedom to practice and study magic in the first place: the revolt against merely using magic to light candles was the actual start point for the birth of the Circles in the first place. The Templars and Chantry have certainly gotten use out of the mages being able to practice magic- Qunari invasion in particular. But now they're facing trouble because they have allowed mages to develop and practice magic that can't be so easily overcome. I wouldn't be surprised if you find some in DAI who argue the pre-Circle tolerance of magic (which was almost zero tolerance, rather than significant tolerance in a segregated society) is the way to go. And the pillar about protecting mages from mundanes? That could drop from a principle of 'we protect mundanes from mages, and vice versa' to simply 'we protect mundanes from mages'- that might not seem like a significant difference until you consider what could occur to mages if they weren't a protected class of people. Which, as difficult as it might seem to believe to many, they are- right now the Mages greatest threat has been the Templars, not least because the Templars have been a bullwark against most other threats. If Templars would not interfere with fearful mundanes who might try to kill a mage, but would strike down a mage who tries self-defense because they are harming the mundanes... well, you've basically disallowed self-defense. Or at least are not protecting that at an institutional level, even if individuals might.
This isn't to say that that Templars would be wise to want to change the objectives of their system in such ways. Just that they could want their own changes: the longer the rebellion goes, the less it will be about a struggle of 'mage preferences versus status quo' and the more it will become 'mage preferences versus templar preferences', with the Templars preferences being free to drift from the status quo.
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