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Your described scenario wouldn't work, as soon as someone was killed by Gai or Hiruzen or whoever you wanted Shisui to mind control, word would have gotten out through someone. Civil war would have broke out in your scenario, it would be a domino effect, someone dies, friends/family of that person would want revenge for taking a loved one until all shinobi were killed. Then you're left with a defenseless village which would be destroyed by a neighboring country, that's not loyalty.
No because 8th Gate Gai is so fast, he would speed blitz everyone in Konoha and end it in less than 20 seconds.
It would be much faster and efficient than Itachi's Massacre of the Uchihas.
There won't be any backlash if Gai solos everyone and everyone's friend.