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One of the journals mention that their leader has no idea of where are they getting so much money, and they have bases with captured pals. So it's pretty obvious that they are capturing and selling pals, in order to get enough money to pay the cops to protect the enderanged species of pals.
I dont think that its a bug, but rather that it's a world of grey morallity.
Basically its like a person poaching a common wildlife animal to get enough money to protect an enderanged species from extinction.
This doesn't make sense since she has stated that she loves the Pals and is willing to fight for them.
Lily is unironically the Idol of free pal alliance as in she doesnt really control much or know what her members are doing
The only reason people have speculated conquering the towers for is sometime down the line when it gets updated is to gain access to the Great Tree. The reason they guard their particular tower is in Zoe's Journal that like her father and his father before they were told by someone of great importance to protect it (she doesn't know or remembers entirely why).
Before you say the towers were changing the boss so they had great stats just remember each Faction is also supposed to have their own Special Tech and stat boosters (remember the PIDF leader journal talked about giving white powder to his pal to make it more crazed and dangerous [nothing more crazed than something hopped up on Crack Cocaine or the pal equivalent]). Not to mention they probably had a lot more time in the breeding department through the generations than the bear minimum the player has access to.