Rewatching Alex Jones' recap of the prequels I am reminded that Palpatine financed, at least partially, the Trade Federation in order to exacerbate the situation, and play both sides against each other in order to nab power when nobody was looking. Even with that included, I think my analysis above still stands. We know the Trade Federation had been conducting business with Naboo and other Republic planets, and we know Palpatine would rather see the Republic thrive than sell it out to the Federation powers. In Episode II, for instance, he is adamant of not letting the Separatists split the Republic in half, even if it's because he needs to keep his power consolidated.

Damn these are convoluted movies.