As a devoted owner of three of them, I can tell you that you're quite wrong about that; cats are highly sensitive creatures, and have plenty of empathy. They're also amongst the most conscientiously polite creatures around; if one watches cats interact, there are precise and elaborate manners around interaction, and stepping out of line earns a claw in the nose regardless of hierarchy. (Indeed, one of my lads seems to be personally offended by feline rudeness.) I believe that the former traits lead directly to the latter - to be honest, sometimes I think felines have more highly evolved social interaction than humans.

Don't confuse prey-defeating behaviour with cruelty, either. Cats rely on their senses and have less-than-wonderful immune systems; getting bitten in the face by a mouse could potentially knock out their ability to successfully track their next prey for longer than they can survive without. The elaborate batting/playing is actually defensive behaviour - she needs that mouse to stop moving before she severs its spine.

++ Indeed, I believe that empathy varies inversely with preferred proximity, both between species and within them. Dogs are pack creatures, and the members of the pack will often treat each other abominably; the incidence of sociopathy in humans skyrockets in inner cities; sensitive beings tend to be more empathic, but also to be introspective, shy, reserved...