Yes. Also, many of them had friends and family members killed by Guwon and the Hounds before they ended up in the town. They didn't see them as people, but rather as roles to fill in: A teacher, a doctor, a warrior, and so on. And they could dispose of them if they didn't play along. (Of course, nobody was able to truly speak out against this way.)
On principle, it ensured their survival. But at what cost ? 'dead relatives, living in constant fear of being the next target, and struggling to keep their humanity and faith in each other.
So yes, Guwon was protecting them, but in a flawed way. Like he was the leader of a pack of beasts and using natural selection to determine who deserved to live, from the most likely to survive at the top to the weakest at the bottom.
I hope for a redeem arc for Guwon in the next chapters. I'm sure his fucked up way of thinking come from what his past hide (amnesia ? Bio weapon ? Mad scientist sh't ?) and he can still saved. <3

I dont think they're idiotic for fighting. If I would've seen a colleague die because he wanted some medicine for his kid I also would've wanted to rebel. Providing people with comfort doent necessarily mean that they're happy. People love convention and things done "the old way". They lived under a democratic rule and had jobs which were worth keeping. No one was killed over measly things and accusations took a looooooooong time to be proven. Now, they just get killed. They fear for their lives and because of that, they cant enjoy all of the luxuries around em. So or course they want to rebel. Also, the hounds are just insane. Thats all that is. They're in a cult with Guwon as the head and if Guwon told them to, they would kill everyone. Even if your saviour asks you to murder innocent peeps, you shouldn't willingly do that because that just shows how psychotic you are.