I've never come across this story of saffiyah before, I don't know how I missed it in any study of hadiths. I was aware of the killing of a tribe but this addition really is quite disturbing. As for Muslims who would try to romantacise and rationalise the treatment of Saffiyah, really need to understand that Mohammed is considered an example to all mankind, meaning Muslims would have to agree that this was the best way to handle the situation, as he was the best/perfect of men. I personally would not have the heart to inflict such traversties against saffiyah and there are alot more humane methods to resolve the issue he had with the tribe. Does this make me a better man than mohammed?. While I was a Muslim, there were stories in Hadith, I use to feel guilty that I would not react the way Mohammed did in those situations and there were better ways to solve it, he was a better man than me why couldnt I accept that he would do these things.
This hadith is wrong because it goes against the Quran, since Islam forbids conquest unless it is for retaliation. Also maybe there is more to the story we do not know about.
See what your doing here. You are reinterpreting history how you see fit which is perfectly fine but if you want to assert fact, you have to present contrary evidence. The overwhelming evidence suggest that a historical figure named Mohammed destroyed a tribe and enslaved the best looking woman for himself. Is it plausible that this event happended in the way I described? yes why? because there is independant evidence that this kind of event was the norm in the time. So in terms of best guess and thats all we have implies that this event may have happened the way hadiths have laid out, though specific details may well could be propaganda but thats the problem with hearsay.
I know you will consider the Quran as the alternate source, however this relies on you providing valid evidence that mohammed actually practised what he preached and did not go about chopping and changing on a whim (like hadiths and the sira would suggest), and I would not be surprised if you struggled with this, it is very difficult and close to impossible.
BTW being the norm does not mean something is morally right.