That was one captain who was offer officious, the Stormcloaks are a bunch of racist, xenophobic and ignorant barbarians so I'm going to side with the Empire if it's all the same to you.
I agree, also Ulfric didn't exactly have the clearest understanding of the whole picture. The Empire's decision for a treaty was ultimately the wisest move - they established a tenious peace to lick their wounds and rebuild their forces for a future attack on the Thalmor (I got the vibe that the Imperials didn't like the Thalmor, so I'm assuming they're going to exact revenge sometime in the future). Giving up may not have been the way of the Nords (Ulfric often mentions how weak this is) but a chance for a second strike is better than an "honorable death."
Also, if Ulfric really wanted the worship of Talos back, why didn't he just take sides with the Empire and together - crush the Dominion? By kicking the Imperials out of Skyrim he truly fullfilled his role as a puppet of the Thalmor. He removed Skyrim's greatest asset against the Dominion, caused a rift among the people, which further weakened Skyrim and replaced the Imperials with a weaker, thinly spread army.
Ulfric's a good guy and the Empire is kind of a dike but man... he could've planned things out better.