DY: Your argument is faulty, 1) because people go beyond the letter of the law as established by Chazal all the time, and 2) because the abuses inherent in animal agriculture did not exist until the 20th century, and thus Chazal would know nothing about them. In fact, the worst abuses (veal, foie gras) have already been banned by major poskim. If poskim were informed in detail about many of the other practices commonplace in modern factory farms some poskim would probably ban at least some additional ones too.
There’s no blanket statement in Chazal that human need must always take priority over animal suffering. Instead, reducing or preventing animal suffering is an important value, but inflicting pain (or more pain than necessary) is often technically allowed in many cases. Yet that doesn’t mean we should do it if we don’t have a good reason.
It’s the same with returning a lost object to a gentile — it may not be technically required in many cases, but that doesn’t mean we should take advantage of that technicality unless there’s a really good reason.
Remember that Chazal repeatedly implore us to emulate Hashem’s traits, especially compassion. To say you can’t be more compassionate than the minimum Chazal requires is bizarre — acts of kindness have no measure, and are one of the foundations of the world.