"Not only have I destroyed the SWAT Kats, but their reputations as well," but still, it seems a little backwards.
I can see things from your point of view, but here's why I think Dark Kat's actions regarding this point make sense (and feel free to disagree, as this is entirely subjective):
1. The public wouldn't know the SWAT Kats are dead, just Dark Kat and Hard Drive. Dark Kat is sadistic, and wants the SWAT Kats to suffer a horrible, drawn out death (the conveyor crusher). Once they're dead, he doesn't want to leave any evidence (rigging the factory to explode). I'd assume that factory was going to be a pile of smoldering rubble regardless of an escape attempt or not.
2. Ruining their reputation postmortem is useful because Dark Kat can continue to operate secretly, keeping the attention on the "SWAT Kats" and away from himself while he completes his objectives, demoralizes the city, and weakens the position of the city's elected leadership that had both passively and actively backed the vigilantes.
3. He can later have the SWAT Kats "die" in a confrontation with the authorities once the ruse is no longer useful, the ruined reputation denying the heroes the label of martyrs, further serving Dark Kat's sadistic desire to effectively kill the SWAT Kats both literally and metaphorically.
As you've shown, the way things are portrayed in Night of the Dark Kat are admittedly clunky, but I can see what they were trying to attempt, and I still think it pales in comparison to the level of (enjoyable) absurdity displayed in Razor's Edge .