Were they the villains? I remember the rogue three-letter-agency executive being the BBEG.

Part of the (relatively) happy denouement included the Chinese coming in with the nondestructive process and everyone being quite happy with that. So yes, the Shredders were the villains.

I think some villainy is implied by "billionaire-backed-woodchipping of a library," but it's just my interpretation, no actual knowledge of Vinge's perspective.