I believe much of the unexplained "illness" in the borg is due to people on a subconscious level percieving something is terribly wrong with their religion while not being consciously aware of what it is. This causes all manner of symptoms, both physical and psychological to manifest which the person puts down to "the stress of living in Satan's system."
As far as the whole is the GB evil or deluded question, who can know.
This I do know, they know exactly what they are doing...and always have known.