I was just about to post the Zez/Exile conversation from the end of the Nar Shadda questline from LP archive too. Like you said, Zez did admit the Council screwed up by not looking inward.
"Nor were we. The day we cast you out, that is the moment I decided to leave the Order. Because I do not believe we truly faced the reasons you were exiled, and if we do not examine such truths, then we are already lost."
https://lparchive.org/Knights-of-the-Old-Republic-II/Update 17/