I understand your displeasure, and certainly the state bears responsibility for maintaining drivable roads free of hazards, but sueing the state is asking for a hassle which probably far outweighs even the dealer's price for a new wheel. The cost of retaining a lawyer (unless you are one and can pursue this without additional legal assistance), taking time off to file motions/appear and testify in court, etc. is probably far more than the few hundred bucks for a new wheel. Before doing that, if a simple claim is either dismissed or decided adversely, you might want to check and see if the cost of repairing the damage is covered by your insurance. Several years ago I had a Subaru that had a headlight damaged to the tune of over $100 (a lot to me at the time, I was a teenager without much $!) because of the type of unit it was, and my insurance picked up the cost due to the headlight being "necessary driving equipment" and the comprehensive portion of my coverage kept me from having to shell out cash from my own pocket. Just a thought.
And on the spare issue, if y'all don't mind losing a slight amount of cubby hole space, buy a wheel of the same dimensions as the normal Insight wheels (I got mine from Discount Tire Direct, it isn't the same style as the regular wheels, but then again, you'll only be using it as a spare, its steel, and cost me about $40 including shipping). Then, when you get new tires, have them mount one of the old tires with the most remaining tread on the wheel you've bought. Then, in the worst case situation, you've got a full size spare which means you can go a lot further with fewer concerns than with the toy-tire spare.