I like the idea as a concept and even said so in my initial post, but given that life wouldn't exist without magic, and everyone knows it, why anyone would denounce it? Then again you raise a good point that he's only using it to attain power, though that still doesn't explain why Teela hates it so much.
You're assuming that everybody knows it. From what I could tell, that knowledge wasn't very well or widely known. My impression was that Teela didn't know until she was told so by the Sorceress and Evil-Lynn. All of the non-magic users seemed to have no idea that there was a connection between magic and Eternia and that Eternia existed because of magic. All they knew was that there was little magic left in the world and thing were worse off for it, but I don't think that any non-magic user, aside from maybe Man at Arms, knew of the connection and how it affected Eternia.
But, I'll agree, Teela did go with a big chip on her shoulder throughout the 5 episodes. My guess is it's because it made her feel betrayed and insulted that nobody, esp. Adam, that they could trust her with the secret. That despite all that she's done for the kingdom and with/for Adam/He-Man that she was still not important and/or trusted enough to about Adam being He-Man. I will have to say that her initial reaction was probably a bit too much, realistically, I don't think that someone would get that pissed over the seeming betrayal and lack of trust right away after losing a close friend. I'd think that's somebody that would develop later after she's had time to get over her initial grief. Then again, this is only a 10 episode season, there's not enough episodes to let her stew and develop her sense of resentment.