Setting up effective, local security forces

[Dayuhan]

So where exactly is my pet approach worse in regard to puppet government legitimacy than the generally practised one?

It loses the distinction between us and them.

You can speculate over your pet approach if you like, but realistically it isn't going to happen, and I don't see how you can draw a meaningful comparison between the establishment of "sepoy-like forces" in imperial settings (which Americans did as well as anyone else) and what you're proposing.

Your initial contention:

The Americans never really mastered this indirect rule and the setup of effective indigenous sepoy-like forces either

still seems somewhat dubious to me, both for the misplaced comparison referred to above and in the implicit assumption that "indirect rule" is the desired end state.