This is a What If scenario. Set in the early 2350s. The Cardassian border wars are raging and Colonies are being attacked and in some cases razed to the ground. We know from Canon that the Border wars wasn't a big deal to the Federation as the bulk of the Fleet was held back.
I don't know if that's actually accurate.
The Border Wars lasted for years and were generally various minor wars that started and ended. The wars started in 2347 and lasted into the 2350s, with unofficial border skirmishes erupting now and again in the 2360s.
There is much dispute on just how bad the border wars were for the Federation, but what can not be disputed was how bad they were for the Colonists. And we do know that the Federation, for whatever reason, did not commit sufficient forces to stop the Cardassian attacks into their territory. Starfleet is seen as unable or unwilling to defend the colonies.
We simply don't have enough information to know that for sure.
I think the problem stems from a lack of understanding that the general population has of Starfleet and Cardassia at that time.
In regards to Cardassia, before Cardassia's rapid expansionism, the entire planet had undergone massive famine. It was at the time, a very artistic and culture driven nation. Unfortunately, from what I can only guess as a result of decadency and corruption, the entire planet--despite being a star-faring civilization, underwent a massive famine. This was apparently blamed upon lack of resources, but the technology available would have made this laughable. Creating artificial stations where food could be grown was possible, as was the means of harnessing local resources within Cardassia's primary solar system.
A new order came into power and it was a literal fascist state. It worked night and day to tear down the old Cardassia and replace it with an spartan and work oriented culture. You can see this in Cardassian culture; the propaganda given to outsiders and the general public is one in which society is family oriented, where nothing is wasted on frivolous things (such as art and games), and an expectation to sacrificing for the state. Now look at the high ranking officers like Dukat; they love to drink, they love to engage in extramarital affairs, and they routinely abuse their power. Interestingly, in what was likely a downfall caused by elites engaged in decadency resulted in a stoic society ruled by secret decadent elites. Hence why when Dukat's lovechild was exposed, he lost everything.
When we look at the Federation though, we see an exact opposite. The UFP was growing not out of desperation, but out of an overabundance of wealth. People left Earth not because they wanted a better life, but because they suddenly decided they wanted to be Scottish hipsters and start a Scottish planet with historical Scottish buildings and culture. In the TNG era, these colonies seemed to boom across the entirety of UFP space. Even within the TNG show, we saw lots of new colonies being established with UFP oversight, but we also know that a lot of colonies had now government oversight. The DMZ colonies were in fact, some of them. We also saw other colonies that had been discovered later that were horribly dysfunctional or based on some sort of odd social experiment. I mean, there was literally a colony made up of five flavors of clones.
You match this growing colonial expansion with the greater and greater expectation within the UFP of a higher standard of living and what's more, a more meaningful style of living. People were joining Starfleet not to scope out the final frontier, but so they could could work in a lab on the final frontier. And that's what the core UFP goers cared about the most; the cultural and scientific pursuit of Starfleet into going into the unknown. Their newly established colonies certainly cared about that, but they also seemed to care about being protected.
Which is not possible when you have both A) A massive civilian and private sector that is quickly outpacing the military that is supposed to protect it and B) A military that is being directed towards far-flung frontiers away from the people it should be protecting.
Therefore, my read on the Cardassian-Federation Border wars is that it's not that the Federation Council or Starfleet intentionally held back, but that the Federation's civilian expansion had overextended itself, while Starfleet itself was
poorly positioned by bad policies. So when the rubber finally hit the road, Starfleet had very few assets that could be sent to deal with the growing Cardassian threat.
And let's also look at what the policy deciders in each camp was likely thinking.
Cardassian -- The leadership has no choice but to succeed. Backing down from a power like the Federation would make the leadership feel weak. In addition, their intelligence service believes that the Federation cannot defend those colonies because of their poorly positioned fleets. And really, how could the Cardassian leadership, after purging their liberal elites, expect to admit to themselves that they should submit to a very liberal elitist culture like the Federation? If the UFP scrapes their knees, they'll go home crying to mommy. And really, taking a few colonies on the fringe of UFP space won't cause the UFP to overreact. Why would it?
UFP -- The relatively new and disgusting Cardassian government is poor, inexperienced, and working with technology that from a Federation perspective, is about a hundred years or more out of date. If they were to just apply economic and social sanctions on Cardassia, while offering them a carrot, eventually the Cardassians will overthrow their fascist dictators and accept the UFP liberal ideology. More awkwardly, most of their starships are off in deep space stargazing. And are at least 25% developed for stargazing. And re-positioning the other ships could open up the core territories to Klingon or Romulan attack. The best answer is to simply use the ships available to keep the Cardassians back and keep offering them peaceful alternatives.
And I think the results of that created a situation where the Cardassian military was unable to defeat even what little resources Starfleet had in the area, but couldn't simply admit defeat because doing so would remove legitimacy from their government both in its continued existence and its original creation. Meanwhile, the Federation couldn't accept that any rational actor would risk a major war with them and they didn't want to either escalate the situation or send resources to defend those colonies.
The result is that the Cardassians treated the wars as a major conflict both because it was politically expedient for the politicians and because it was a legitimate threat to the emerging Cardassian culture. The Federation downplayed the conflict because if they didn't, then they would have to basically admit to looking the other way while their people got slaughtered because they were both in a poor position to do so and didn't want to undermine their own peaceful ideology.
So in this scenario a number of Federation officers have simply had enough of Starfleets pussyfooting with the Cardassians and resign from the Federation. Their goal is simple. Build a Federation Warfleet and Army to do the real work of defending the Federation while Starfleet is free to do its explorer fleet.
Would instantly fail as they lack the resources and technology of the core worlds.
That Starfleet will oppose a new rival for resources, funding and personnel is obvious. But assume for this scenario that there is quite a lot of support for the building of a real Warfleet and Army in many of the colonies, particularly those along the frontier and facing borders along future and former antagonists. And they have quite a bit of power to push through this agenda.
Three questions come to mind.
1.) What would a Federation battlefleet look like in comparison to Starfleet?
It would be the Maquis. Maybe a larger fleet and maybe a few larger ships, but it would be the Maquis. Because that's what the Maquis effectively were. They had a lot of UFP officers who defected and they had contacts within the UFP itself.
2.) After given 5 years to build up an Army and a small fleet, could this Force make a difference in defeating the Cardassians?
No. In fact, they would be in a worse position. By essentially separating themselves from the UFP as an entity, they would force the UFP to either take responsibility for them or admit that they were a separate entity. From an internal consistency point, the UFP would not be able to accept responsibility because the colonies would have violated the internal means in which the UFP makes decisions; the Federation Council. Second, the obvious answer to this from the core worlds is that the colonists should just relocate to different worlds that are safe. This was offered in late TNG and it was brutally shot down. Finally, the officers and civilians are technically traitors.
By then forcing the UFP to accept that these people are a different entity, they rob those people of the greatest protection they had from the Cardassian Union; the Federation itself. No strategic depth, no major orbital defenses, and a fleet that is less capable than the Cardassian fleet itself.
This is why, in TNG and DS9, the UFP went to great lengths to try and keep the colonists under their umbrella; because any accepted declaration of independence would immediately result in the Cardassians accusing the colonies of being a hostile power that has repeatedly attacked them and invade. There were already three competing narratives:
Cardassian -- The colonies are terrorists and those planets were ours in the first place.
UFP -- Those planets are contended, but they're our colonies and you can't just slaughter them for being there.
Colonies -- We are not colonies, this is our land, and you both can go fuck yourself.
The UFP narrative meant that if the Colony narrative were accepted, then the colonies would be on their own and they wouldn't have stood a chance in hell against Cardassia. All Cardassia had to do was drive a wedge between the two to get their way. Notice that when the Dominion took the Cardassians in as members and slaughtered the Maquis and took control of the colonies, the UFP did not declare war. It took an assault upon DS9 to declare war.
3.) Would Section 31 use its power to support such an initiative?
No.
