"but what I'm getting at is that the fundamental issue is that Uber are overcharging the passengers. If the drivers are to be paid based on what Uber charge the passengers, the drivers will be part of the same problem"
If Uber were playing by their own T&C's with the drivers then you would be correct, the drivers would be part of the problem!
The agreed deal between Uber and the drivers is that the drivers get a percentage of the "determined fare". What is being disputed is the "determined fare", as it appears the "determined fare" as given to the service user (ie. passenger) is for a longer route than the "determined fare" given to the driver. The important point is that Uber are using the fare shown to the driver to calculate the driver's share of the business, when according to its agreement with the driver, it should be using the "determined fare" it gave to the passenger...
What this means (if the drivers win) is that if Uber implements dynamic pricing to passengers, drivers should get a cut of the dynamic price.
However, you are right, fundamentally Uber are overcharging the passenger. However, I suggest that if the route Uber used to price the journey for the customer is not excessive, ie. it would be a reasonable route and Uber gave the driver a selection of routes, that included the one used to price the trip, then the customer is paying for the expertise of the driver and the issue of overcharging is not so clear cut.