“What would be a natural response to the formation of that gang? Wouldn’t it be a gang of “also baddies but baddies whose interests align more closely with ours?”

Yes, and this is so obvious I can’t believe you are being downvoted. If authorities do nothing, vigilantism will become the increasingly common response. This is exactly what happened in the Seattle CHOP zone- no police = adhoc armed groups claiming that authority for themselves.