Him being with FUG or showing up next to them means nothing, he can easily be Headons eyes into FUG or spy for Rachel. We don't know anything it's all theories or assumptions.
They didn't use her and refused to turn Baam into one, because they don't knew that this weapon will be too strong to pull of the job or not. Only small part of FUG actually wanted to melt Baam with the thorn, Also, if plan don't work they will loose the best shot to kill Zahard, when in reverse, they can grow controllable irregular, whom they can artificially weaponize step by step. Also, how could be the ability to kill the king be useless for her if she literally said that she will be the one who will make Arlens dream come true, in which killing the king are priority number 1(or having base ability to do so). It will nullify the base purpose for her climb if she can't kill the king. Also Rachel will never accept to gave up power that she have in a equal level as Baam because of her base core trait as jealous bi..ch. What you are purposing here is contradictory to what we seen in the mahwa on Rachels part of story(to be perfectly clear).
It doesn't matter will she stay with Gustang or won't (although considering Gustangs way of thinking, he wouldn't let her any choice, except being his personal working slave). the problem here is that, by your words, she basically must gave up her only power that was equal to Baams(aka ability to kill the king, potentially), just to have comfortable ways to climb the tower? For what? It will ruin her main character trait that were driving her to go upwards, aka the need to see starts(no powers, no killing the king, no killed king no stars, it easy equation to draw in mind). If she gave up that power, why would she want to have thorn for herself? We knew that only irregulars can use it(to kill the king), and Rachel is anything but not retard or stupid.