On topic: The primary impression I got was that Celestia didn't have the emotional firmness to carry out the plan she logically agreed was the best plan. As you put it, she has sentimentality, not true love. The story is about her abdicating, and about thrusting her duties onto Twilight. Twilight will shut up and multiply.
That is, I agree with your 1 and 2. (I don't think the evolutionary plan is evil- but I'm also willing to trust cold equations.) It also doesn't help that Celestia isn't saying "I like Twilight more than I like myself, I think Twilight deserves to live more than I do," Celestia is saying "I think Twilight will be more Stalinesque than I am, and that's what my little ponies need more than mothering."
The traditional way to make Celestia seem selfless is to have Celestia actually go native. That is, she's not just raising up Twilight so that Twilight can be the Bad Cop that leads Equestia to the Glorious New Dawn, but she's raising up Twilight because she thinks Twilight can come up with a better plan than Titania- the short-sighted ponies will figure out a way to abolish tradeoffs and make the world full of both glory and smiles and rainbows! I do not recommend this path: it is traditional but it is not correct.
Alternate, simpler explanation: people think the situation is sad because the situation is sad. Focusing on the parts that will make the situation happy will make people realize the things about immortality that are great. Celestia never visualizes the bright and glorious future that Twilight will usher in, and how Twilight will get to experience it when she might not. It's implied by her belief in the equations- but she spends more time fantasizing about the stallion she never got to have sex with / the foal she never birthed than she does fantasizing about Equus Superior. No wonder people think she's selfish!
Somewhat off topic:
I don't think you understand the impropriety of asking me to turn my friends' final moments into reports for you
Something that shows up sometimes in narratives might get called "the superagent assumption": basically, if something happens, the most strategic / powerful character intended it to happen. Thus, this is evidence that Titania both understands and intends the impropriety of these reports. (I'm not on TVTropes enough to know if has a name there.) It's not clear if that's what you intended- and if not, you might want to have Celestia express it as a value disagreement ("I can't express how much I resent" instead of "you sure you're doing this right?").
Off topic: I just realized that you wrote Big Mac Reads Something Purple, which is one of my favorite MLP fanfics.
Alternate, simpler explanation: people think the situation is sad because the situation is sad.
The situation is sad, but I was expecting people to think about causality. It looks like they may just be associating emotions with salient features.
If this is what happens, the Dark Arts potential for exploiting this are enormous.
...Focusing on the parts that will make the situation happy will make people realize the things about immortality that are great. Celestia never visualizes the bright and glorious future that Twilight will usher in, and how Twilight
My Little Pony (generation 4) has 2 immortal characters, who get a lot of sympathy from the bronies. "How sad! Poor Celestia and Luna must see everyone they know grow old and die. How much better to die yourself!"
I tried to write a fanfic saying that death was bad. But I had to make it a story, and it ended up having other themes. I don't know whether I like it or not, but it was very popular (now approaching 7000 views in 3 days on fimfiction).
I was pretty sure the message "death is bad" was still in there, because Celestia says things like "Death is bad" and "I'm afraid of dying." So imagine my surprise when comment after comment said, "Yes, immortality is such a curse!"
Why did so many people come away saying that? Tell me what you think. It will help to know that Twilight regularly writes "friendship report" letters to Celestia describing what she has learned about friendship, and that Twilight and Celestia have an especially close relationship.
Please leave comments on the google doc or here on LessWrong, not on fimfiction or Equestria Daily. Please don't down-vote the story if you aren't familiar with the characters or aren't calibrated to fimfiction voting.
Mortality Report on google docs (comment-enabled), 4000 words.
Spoilers after the bar.
I can see two things that happened: