You make a good case against accepting, even legally entitled, funding from the Zionist government. And, indeed, as you indicated groups like Brisk, Satmar, the Eidah HaChareidus and others, in fact, refuse to accept government money they’re legally entitled to under Zionist law — such as government funding for Yeshivos. Which is why those aforementioned kehilos are prolific fundraisers in Chutz La’aretz for their Yeshivos which decline all government funding.
On the other hand, kehilos affiliated with Agudas Yisroel and the like do accept government funding. And, in another sense, logically it makes sense since the members of their kehilos pay taxes to the government that is used to fund educational institutions. They figure why should they not accept money from the system when they’re putting money into the system.