Actually, they do leave survivors. The Viltrumites conquer your planet and reduce your people to slaves who serve the Empire and hand over their resources.
They are kind of like the Saiyans in that they send a single warrior to your planet, but instead of wiping out everybody he's supposed to undermine that planet's capability to defend itself. They pose as heroes, defending that planet against things like being hit by meteors or alien invasions to gain the trust of the populace so they don't come under suspicion when the planet's other heroes start popping up dead. At which point more Viltrumites arrive to conquer the planet, but if the planet resists too much they simply wipe them out and import slaves from another planet to serve them there. Their hold on your planet is basically backed up by the fact that you can't do crap to stand up to them and a Damoclean Sword of genocide held above your head should you ever rebel or refuse.
They didn't mass murder each other to prove their strength, but as a Darwinian attempt to cull the weak from their species. Likely they were also hoping to weed out any Viltrumites like Thaedus who weren't utter psychopaths or had developed a conscience which of course led to Thaedus deciding to kill Emperor Argall. They basically wanted every single Viltrumite to be like Thragg or Conquest, uncompromising and brutal without any remorse for the horrible shit they do.
As to the logistics, I can't really argue against that. We don't see a heck of a lot of the Viltrumite Empire outside of the Viltrumites themselves. It's never really made clear to what extent they directly control your planet, whether or not they force you to adopt their laws or culture, whether or not they institute eugenics programs to similarly cull the week from your species as they did from their own, if they bother defending your planet if it's threatened or if they leave you to defend yourself because if you can't then you were weak, etc.
And to be fair, this isn't uncommon in media. Look at the original Star Wars trilogy, they never really tell you what being part of the Galactic Empire means for your planet. Do they force you to enact a certain set of laws, or are you allowed to govern yourself so long as you pay tribute to the Empire? It wasn't really necessary for the story being told of a group of scrappy underdog Rebels fighting the big bad Empire.
At the same time, it's kind of annoying because an animated adaptation allows you to expand on or correct flaws that were present in the source material.
As to why Mark not allying himself with the Viltrumites is such a big deal is because almost nobody can stand up to a Viltrumite except another Viltrumite. This means Mark already has the potential to become the Coalition's most powerful weapon against the Empire.
And finally, regarding why Thaedus never bred an army of half-Viltrumite children to take on the Viltrum Empire, there's actually two reasons. One, Thaedus is convinced that his people (or at least enough of them) are irredeemably evil and need to die. Why would he inflict Viltrumite hybrids on the Galaxy that he believes may be no better than the Viltrumites themselves?
And two, until humanity was discovered there wasn't a species that could hybridize with Viltrumites and still produce warriors as powerful as the Viltrumites themselves. Remember that last battle against Thragg, he started using his half insect people kids as weapons, literally smacking Omni Man with them and they were just splattering on him. Even when they turned on him he was just tearing them apart like they were nothing. The only reason Mark turned out so powerful is because how similar humans and Viltrumites are genetically. A half human-half Viltrumite is basically just a Viltrumite.
There's also the possibility that they just view other species with such disdain that they would never willingly screw them and have kids before Nolan banged Debbie and had Mark. We literally do not hear about or see another Viltrumite hybrid until Nolan knocks up bug lady. So it's possible, although really really improbable, that Mark was literally the first Viltrumite hybrid in the history of their empire.
