Respected Sangomji,
Ur answer to my query is very useful and valuable. Very Thankful to ur response, although major part of it deals with with status of Upanishads and growth of development of thoughts in Hindus ( query of Vaagmiji), nevertheless this one is an interesting and important topic & I would love to share and gain with other members regarding it. As for a Christian "problem of evil" is a dilemma same is for Hindu regarding " definition of Hinduism". Thus I would love to deviate from my query for this healthy discussion.
Coming to Haptahendu, most probably u would be aware its ( presumebly) original Sanskrit word is SaptaSindhu( found in RV 4.28-1, 2.12-3) and it was the region of Punjab( Pak Punjab at the core) to which Aryans expanded from current West. UP and Haryana region( Read History of Rigveda by S.Talageri).
Rigveda's language is so old that its very hard to find the coherence of thought in it( Talageri although with reliable tools has come upon the internal chronology of RV). At one point seers talk about mundane things like money, wealth, victory in war, etc and on the other hand we come upon very profound statements( Nasadiya Sukta, Asya Vamasya sukta, Vamadeva suktas,etc). From Talageri's book one may infer that most these seers were perhaps singing for their patrons ,themselves or their people( Imagum Rudraya tavase karadine.....-RV 01.114-1 also part of Shri RudraNamakam) which at later point were compiled into present form. How much effective was their prayers, their actual meanings, etc are matter of speculations as we are long cutoff from them. Actually Vedas are full of contradictions. U may find polytheism, pantheism, Monism, Monotheism( Read 01.89-10 and Purusha Sukta), Agnosticism, etc in same book. For example refer RV 2.1-Hymn by Gritsamadas Shaunuhotra for Agni and u may find seeds of monism while same Rishi in 2.31-32 praises various gods( seems polytheism). Agastya MaitraVaruni talks about Brihaspati in 1.190 while abruptly switches to insects in 1.191 . Rigveda doesn't even seem like a religious book of modern religions( although if u read Arya Samaj interpretations it looks like it is Highest). In rigveda u can find blabberings of a gambler, prayer to press-stones, ghee, Weapons of War, and amazingly mockery of their own practises( as we think now) in Frog hymn(07.103). Even gods' positions also differ. At one point Indra is shown as a macho personality while at another place he is shown to be afraid also.
Perhaps Rigveda was a kind of Encyclopaedia of its time thus it was declared to be Eternal knowledge. Thus reading RV only shows the development in Hindu minds. As for Upanishads, U will find Older Upanishads( Redacted directly from Brahmanas or Aranyakas like BrihadAranyaka, Chhandogya, Aitreya, Taittirya,Kena, etc) conforming completely to Vedas. They contain direct quotations from Samhitas like In BrihadUp and Aitreya Up, Vamadeva suktas( From 4th mandala) are directly quoted to show nature of enlightenment while in Svetashvatara Up and Mundaka Up suktas from celebrated Asya Vamasya hymn are there. Almost all the peace prayers in Upanishads r from Samhitas. But yet Mundaka and Katha Up show theoritical knowledge of Samhitas and rituals as of lower level( Undoubtely). There is definitely a pattern of evolution in understanding the reality in Hinduism. It starts with rustic but simple hymns of Samhitas to the complex philosophies of Prasthantrayi and ShadDarshanas. And perhaps these evolutions and amalgamations are the reasons for its survival as well as its simultaneous outlook of ancientness and modernness. The religion which doesn't evolve continuously go into oblivion like Nordic, Greek and Egyptian religions. If u see all major religions, u may find this evolution pattern. Obviously in Hinduism, amalgamation and evolution is most due to its most ancient roots. for example: The most ancient Abrahamic religion of Judaism is said to have started with a favourite national god of " Jehovah" as Murugan is favourite god of Tamils. They used to practise sacrifice but abandoned it with course of time. Christianity is full of myriad examples of amalgamation of local cultures to suite the taste of local Christians. Buddha and Mahavira never instructed to make his idol and worship it. And yet across India and other countries u may see their idols worshipped no less than a god. They would have dumbfounded to see these practices among their "disciples". But Buddhism changed itself according to the countries it was propagated. The beauty of Hinduism lies in the diversity and yet a coherence in it throughout Indian subcontinent.
One more point, the range of yagyas is very broad acc. to orthodox definition. Almost all forms of worship, rituals, meditation, contemplation, etc constitute a Yagya. Samhitas and Brahmanas talk of outer yagya while Aranyakas and Upanishads talk of inner yagya( Mano yagyen Kalpatam, Atma Yagyen kalpatam). One thing is certain, as Isavaya Upanishad (Shukla YajurVeda- 40th chapter), commands one should accept the reality as whole including all contradictions. Therfore, Perhaps most of Hindus try to live with their interpretations as well as all the contradictions available around them to form a holistic society.
Now coming to main topic, U stated about the animosity among rulers due to their faith, but there seems to be contradictions in the nature of people in South & North in ancient & modern times. In our times, we find Northerners more radical and intolerant towards other religions than Southies, but acc to your attestation( about SouthIndian rulers-what I interpreted) it seems in olden days North-Indian rulers( mostly-except some sporadic cases) seem to be more tolerant towards other religions. I don't know How much part of this was played by the clergy in encouraging & instructing the ruling class. But often in olden days, rulers were quite influenced by the Purohits and their views about other sects. Thus it seems these animosities were also were brainchild of less tolerant priests and theologians of Kings.