The important issue is the one of unconditional surrender, and how hard - if at all - the Allies needed to press Japan at that point.
Once you accept that Japan needs to be forced into an unconditional surrender the bombs are a reasonable option, trading (it was thought) speed, certainty, and low US-casualties for what might have been a considerably longer, less-certain and expensive (in all senses) project.
I'd imagine that the subject of the certainty of high Japanese-civilian casualties came up, and was more or less met with a "too bad." On the one hand, civilian casualties might have been worse with other approaches. (Again, assuming the US had to press for a surrender.) On the other, it was pretty much par for the course at the time. Mr. Reasonable went on vacation around 1943.
Plus, unreasonable or not, the USSR was increasingly a concern. Showing them we've got nukes is something of a coup. OTOH, blowing a way a couple of cities to make a diplomatic statement is excessive.
Yes, that does imply the US came up with a very self-serving argument, with every variable needing interpretation interpreted in the may most favorable to the US and least favorable to Japan. I don't think that's anything unique to the US. (Though, in reasonably modern times, we've got a poor track record. One can hope it's simply because we've had more opportunities to screw up.) Wartime governments tend to do any number of drastic, unreasonable things. Even when they're winning! Reason #7892357 war really, really sucks. The important thing is to not get into that mentality at all.
I think the US leaders were also quite risk averse. They didn't want to see what the Japanese might come up with, given some more time, to follow kamikazes. They weren't thinking about the Marianas Turkey Shoot, which was pretty much the answer to that question. They were thinking about Pearl Harbor, not realizing that the debacle at PH was due far more to American over-confidence than Japanese efforts.
I was under the impression, btw, that the worry with regard to "suicide" wasn't mass-suicide, but instead fanatical resistance. The Japanese forces were demonstrably capable of going much further than Western ones. Yet another "imponderable" in the bomb-or-don't-bomb equation that the decision makers chose to weigh heavily in favor of bombing.
House-to-house fighting through the home island cities could have been terrible. For both forces, and for the knock-off problems like refugees. Which is why I don't think it was even really on the table ... because of the US casualties - not the other stuff. There were other alternatives. Potentially worse than a-bombs, but most likely not.
I'd say racism was a factor. It contributed to the lack of understanding on each side of the Pacific, and it seems very likely at least a few people involved in the debate thought something like "Who cares? They're /insert racial epithet here./." OTOH, could very well have been thinking "Who cares? Look at how many of ours they killed." or, simply, "Who cares?"
OTOH, I don't think we need any racism to explain why a superior power would nuke a couple of cities when it didn't have to. Given the circumstances, I think ordinary human cussedness would account for it.
