On the contrary, the initial lawsuit looks brazenly corrupt,
Because it is.
the settlement tremendously less so,
To be clear, the settlement creates a fund controlled by a council of 5 that is appointed by and serves solely at Trump's will with no oversight, and no real transparency to pay out essentially arbitrary amounts to whoever they decide (and again they are explicitly chosen by and serve solely at Trump's pleasure). Also, this fund and whole mechanism stops shortly before Trump leaves office, making this a machine for Trump to disburse tax funds to whoever he wants with a level of indirection so he can pretend it isn't that.
And then there's the bit that makes Trump, his family and affiliated persons barred from being audited or pursued for unpaid taxes.
If you are in control of both halves of the lawsuit and can pay yourself off that way, and that was the goal, why would you set up an account to pay other people money instead of yourself?
Because sometimes you need to pay off others, and having a handful of his chosen puppets disburse tax funds to whoever he chooses is a great way to do so without having to spend his own money and with a veneer of it being legitimate. Want to bet whether or not a few major figures involved in J6 get big payoffs (people like Rhodes and Tarrio who likely played a significant role in organizing), and rank and file J6ers get smaller but still still substantial payoffs? I mean, this would literally be Trump paying them tax money for attacking the Capitol on his behalf, with a paper thin veneer of plausible deniability. And yes, the goal would be to signal that going along with his plans in the future is a worthwhile endeavor.
If the goal from the beginning was to sneak through the fund to pay off Trump's allies, why make Trump the actual plaintiff?
Essentially Trump sued Trump to make Trump, family and friends immune to the IRS and to create a way for Trump to give payouts to whoever he wants in arbitrary amounts, AFAIK he's not barred from some of that going to people close to him or even he himself. The tax immunity would be a lot harder to put in place if Trump weren't a plaintiff. Also this fund can only be challenged by Plaintiffs, Defendants and the United States - all of which are Trump.
On a related note, an important distinction between a pardon and commutation is that in a commutation you can still claim to be not guilty but in a pardon you are guilty and cannot challenge that fact meaning you can no longer plead the 5th regarding the relevant conduct. I expect the 14 people who were commuted instead of pardoned are likely to receive larger than average payments from this fund, not like anyone but the AG in a confidential quarterly report will ever know.
On another related note, I'm just going to point out that the Trump admin has argued that the Presidential Records Act is unconstitutional and that all records from his terms are Trump's private property to keep private, disclose, or destroy at his sole whim. There's a reason Trump is fighting against records from his presidency (either term) being a matter of government record, and it's not his alleged belief in transparency.