Sure, I see your point. If there are shortcomings in Van Air's operation, I would be the first to demand their grounding. But most arguments I have read here do not relate to their operation, but to the regulatory framework they operate in (and which was not created by them, but by someone else).
My understanding is that they simply invoke the same rights, for example, bmi regional invokes to operate domestic flights in Germany or Eastern to offer domestic flights in France. I appreciate that they are an Eastern European outfit, but this certainly should be no reason to discredit them per se.
If rules for 19seaters are different from those for larger aircraft, that certainly is something to blame the regulator for - if these rules pose a risk (out of interest - I presume that Loganair operates the DHC6 under the same set of rules?).
As for misleading the public - that happens all the time with large airlines having flights operated by regional affiliates or with other airlines franchising their brand. As soon as something goes wrong, they refer the customer to the small print and insist that while all the branding says airline "A", it indeed is airline "B". It is annoying, but not something Citywing has invented.
Re the "Virtual Airline" aspect - it appears to me that this comes down to a lack of enforcement or regulation, for whatever reason, by Tynwald. The T&C explicitly state that...
"Please note that these Citywing Terms and Conditions of Carriage do not apply to scheduled services between Cardiff and Anglesey which are governed by the Terms and Conditions of Carriage of Van Air Europe, a.s"
...so apparently in Wales they do not get away with it.