1) is obviously false, since an engineer could be competent and evil. Or competent and under duress - needing to keep their job to keep their visa, family health insurance, etc. Or competent but misled - "Implement the suggested fix to show how easy it is to work around" "OK, here it is" "Now work on something else", while it ships.
2) Why should you? Unless you're willing to be homeless and leave society, you're not going to find a way to live in a capitalist society which is pure idealism and no compromises, and you can't effect change in a system from without, only from within. Quit, and someone else will implement this fix - you feel good, which is worthless, and the fix ships, which is bad, and Cisco doesn't change, which is bad. Pick your battles and you could use this result in future - to build other people's trust in your recommendations, to widen the review process before future fixes are agreed upon, to have a proven record of the cost of doing things twice.