Going off your last paragraph, I think what Aang did to Ozai was even crueler than just executing him (though I’m sure Aang wouldn’t see it that way).
Ozai was 100% dependent on his fire bending skills. Not just because of his status as fire lord, but the close-minded delusion that fire bending is the superior bending form. Learning or adapting fire bending skills to any other bending (like how Iroh learned to redirect lightning studying water benders) is beneath him and insulting. It wouldn’t surprise me that if Ozai succeeds in his own genocidal plans to take out the other benders, his next step would be to purge the world of anyone who couldn’t bend fire, even if they were born and loyal to the fire nation. Even elite loyalists to the Fire Nation would be enslaved/executed if they couldn’t bend fire.
All this being said, when Aang first defeated Ozai, Ozai was ready to accept his death. He lost, but he would no longer be alive to live with the shame of not only losing his war, but losing to an Air bender (or non-fire bender). Aang taking away his bending was a fate worse than death in the eyes of Ozai. In his mind, he would be living in mental and emotional torture that he’s causing to himself.
It’s also parallel to this:
Azula was an insanely prideful character; she was a princess AND a prodigy. Everything involving fire bending came easily to her. She never struggled, never failed, and was given everything through either intimidation or status.
Meanwhile, Katara struggled to become a master water bending. She had almost no formal training until she went to the North Pole, and even then she had to fight to earn her training. She was taught humility and how to deal with her limitations. When she failed, she learned, grew, and came back again and again until she succeeded.
Katara could have easily killed Azula right there, but outsmarting her, subduing her, and undoing the damage she did against Zuko drove Azula over the edge. She finally failed, leaving her a broken mess engulfed by insanity.
So, yes, having the Diamonds live at the end of SU was ignoring the “fall to death” trope, but that was never the message Sugar and her team wanted to tell. That’s not Steven’s character. It wasn’t even Pink Diamond’s character (even though she did emotionally kill a few characters). Steven never wanted to be a killer, even if it would be justified.
The goal of a hero is to defeat the villain.
Sometimes the villain falls off a cliff.
Other times they’re humbled or humiliated.
And sometimes the villain can change their mind thanks to the hero.