There is a great gain from it, due to its effect on reducing intermarriage and increasing fertility among the Jewish people. If the chilonim who survived the Shoah had moved elsewhere, most of their grandchildren and great-grandchildren would have been non-Jewish. Because they moved to a majority-Jewish country instead, thousands, perhaps even millions of Jewish babies were born that would not have otherwise been born. This is a huge benefit.
Israel has also enabled a large dati and charedi birth rate through its welfare policies. One can’t be sure about these things, but it seems likely that the birth rate among religious Jews (particularly the MO but even potentially the charedim) would have been less if they had all come to America or Europe, where it is not as culturally supported to have large families.
To be sure, the secular Zionists created a secular Jewish identity through identification with the state, but I don’t think this has meant less observance than if the state hadn’t been created. Like I said above, the Jews emigrating elsewhere wouldn’t have even had Jewish offspring, so there would have been few left to be observant. Moreover, the average secular chiloni in Israel is actually more religious than many of the temple-going Reform types in America, since they avoid eating pork and shellfish, fast on Yom Kippur, and take off work for major Jewish holidays.
The government forcibly removing people from learning is a jaundiced way of looking at it. They’re simply enforcing (to a very limited extent) the universal draft on a community that was except from it for many decades, and when they are enlisted, they are given time for learning each day. If they succeed with these efforts, and charedim contribute more to the army and workforce, the chilonim will have a less negative imagine of the charedim and be more open to kiruv attempts.