The "capture Itachi" plan wasn't all that stupid. What was the village supposed to do? They couldn't just let Itachi and Kisame walk around unchallenged. Forcing him to leave by displaying overwhelming force could have exposed other weak points (suppose Itachi and Kisame were using that clone jutsu that they used against the Gaara Retrieval Team?). Also, it was an opportunity to gather intel on Akatsuki, which doesn't come often, and shouldn't be passed up.
They sent a diverse team of some of their best ninja, and Konoha was strapped for talent as it was (Hiruzen complained of this when thinking of how he could possibly deal with Orochimaru, who had, at the time, outclassed every ninja present in Konoha). Those ninja were equipped to deal with unknowns, and Kisame was something of an unknown, wasn't he? And sending multiple people to deal with a genjutsu user is basically your only hope. It's not like they had an Uchiha on hand.
I can't really defend the SRA though, but I feel like there was some lame handwave given. I'll go back and look, but it'll never
not be stupid.
EDIT:
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She claims that all the stronger jounin aren't available, even when Shikamaru directly asks for them. And I guess Shikamaru is a fully-fledged ninja, and needs to be expected to lead his own missions. Plus, Tsunade believed (correctly) that Sasuke had gone to Orochimaru of his own free will, due to being convinced. So sending people who knew Sasuke personally (his graduating class) made the most sense.
Besides, it's not like she told them to wrest Sasuke out of Orochimaru's stretchy arms. Just locate and convince him to come back before he goes into Orochimaru's hands. Even though they expected to encounter enemy ninja, it wasn't an attack mission. It was a locate and capture mission.
