Rather than protecting themselves, it's more likely that the author of the software desires that their software is only used for legal or ethical purposes, and

Rather than protecting themselves, it's more likely that the author of the software desires that their software is only used for legal or ethical purposes, and that clause is their attempt to require that. It's fair for a software author to not want their software used to make the world worse. I think you have a very different interpretation of "charitable interpretation" than I do. As for embargoes - sure. It's just an example. There are plenty of other less morally ambiguous things too.