I think my posts keep getting auto-modded.
I'm sorry if this is considered spamming. (I'll edit my posts later...once I'm able to)
They obviously understood there's a finite amount of it, and that it was a life sustaining resource in nature. Within 25 years they were already in desperate need of starting up a whole new Midgar.
I agree with you. However, at the same time, I don't think they truly understood that mako was finite. It was running out in Midgar and they can't refute that; but President Shinra also sought the Promised Land where there were supposedly more mako than they'll ever need, i.e. infinite. (Or maybe I'm just putting words in their mouts because my memory of the game is foggy. Please correct me if I'm wrong).
As I type this I realize ShinRa could have been cherry picking the Cosmo Canyon's teachings regarding the lifestream and the Promised Land, and still their beliefs wouldn't be in conflict. Because believing in the existence of a land with infinite mako would mean that the possibility of the Planet dying from mako running dry is seen as BS.
I have my own head canon that the real reason they dropped Sector 7's plate was because it was the the second poorest district, and thus people could no longer afford to pay to keep running. It would be too dangerous to drop the 8 sector and risk damaging Sector 1, which is the richest.
So basically they used Avalanche as an excuse to buy more time till they could track down the Promise Land and start Neo Midgar.
This headcanon though. I love it! Never thought to view the plate dropping in that light before. It would certainly paint the late President as a more capabe leader befitting of a (evil) megacorporation.