The very definition of animal welfare is on trial. Can killing healthy animals ever be logically or honestly called animal welfare? It can logically, without any verbal or mental gymnastics, be called animal disposal. But animal welfare? We don't think so and we are in very good company with the leading academics and thinkers in the world on this subject.
Of course there are a lot of so-called animal welfare agencies that claim that killing animals not sold within a limited period of time, is animal welfare, but those agencies are almost always paid to control and dispose of animals, so no matter how many of them there are all saying in chorus that killing equals compassion, it seems more likely to be a pet-disposal industry marketing slogan.
It is not unethical for a pound to kill excess pets - that is one of the two primary functions of pounds in societies which permit the over-production of pets - as our society does.
The other function of pounds is to protect humans from dangerous dogs and there is nothing unethical about pounds killing dangerous dogs in a society that permits dogs bred specifically to fight to the death to be bred, sold, and owned, and which permits the various forms of cruelty - chaining and social isolation - which can make any dog a danger to society - as our society does.
But both these things are highly immoral. As a society we have not forced our legislators to control the over-production of pets nor to force them to ban the social isolation of dogs. Our taxes pay for poundkeepers to kill excess animals and dangerous dogs instead of paying to control the roots of the killing.
The question that the PETA case raises is not is it legal to kill unwanted animals - it is. But is there a conflict of interest if the agency that does that gets millions of dollars in donations from people who do not know or do not understand that it is doing that, also gets millions of dollars in tax money to kill excess pets and dangerous dogs? PETA at least didn't get paid to do what it did.