FWIW, my character does use Kyne's Peace to "bring peace". In addition to wolves, bears, and sabrecats to stop them from attacking, he'll also use it for foxes and goats and stuff who pose no threat. He's used it to stop animals from attacking each other, too.
That's your roleplaying choice. Though I would note that preventing wolves from killing goats is kind to the goats but cruel to the wolves; i.e., an arbitrary expression of power over them.
I'm not sure the Greybeards deny the will to dominate exists. But they're an order of monks who've existed for hundreds, if not thousands, of years with one of their core tenants being that of peace. For them, the proper use of Thu'um is to worship the gods because they don't follow a path to use it for war.
It's still rather a mystery what the Nords were doing at Red Mountain; it's not at all clear that their interpretation of Jurgen Windcaller is historically accurate. As for the denial: my sense is that there's something fundamentally sick about the Greybeards. They have an honored teacher whom they seldom dare even talk to, whose first words to you on meeting you are how much he loves conversation. Arngeir expresses fear of Dragonrend, and advises the Dragonborn to not seek it out, but Arngeir clearly doesn't understand what Dragonrend actually means.
Maybe you could say the Greybeards take the pacifism to an extreme degree, but they're supposed to be the balance against the Blades' want for genocide, and so may come across as extreme in their views just as the Blades do on the other end.
I'm not sure that we can say that they take pacifism to an extreme -- as has been pointed out elsewhere, they seem to be willing to defend themselves at least.
I don't think we can describe the Blades as an extreme, either. If you ask Paarthurnax about the Blades' demand to kill him, he says that they're right to distrust him, as dragons cannot be trusted, and they have no way to know that he is an exception.
It's worth pointing out, though, that the Blades and the Greybeards are clearly counterposed to each other, and each makes accurate criticisms of the other. In particular, Arngeir cautions the Dragonborn that the Blades have never truly served the Dragonborn, but have some other hidden agenda. The willingness of the Blades to cut off all contact with the Dragonborn for refusing to kill Paarthurnax demonstrates that the Blades are liars, that it isn't true that their highest goal is serving the Dragonborn.
Neither the Greybeards nor the Blades are reliable advisers.
I'm not sure the text in which the words are found bear on the meaning of the word. http://www.uesp.net/wiki/Skyrim:Disarm, for instance, uses "Zun" (weapon) in reference to the greatest weapon being the mind of a steel-souled warrior, yet the shout is about getting rid of the physical weapon in the enemy's hand. In addition, the text for "Haal" (hand) has it as a person's name.
Actually, the context for Zun would tend to confirm the idea, as the effect of the shout is to demonstrate that the user of Thu'um can overcome mundane weapons. The rest seems pretty random though.