Firstly, on the Adams’ issue, I’m surprised no-one has brought up the accusations made by Richard O’Rawe in Blanketmen — namely that the British had made an offer which largely met the hunger-strikers’ demands but that this was rejected on the orders of the leadership (including Adams), who, it is suggested, basically wanted martyrs for the cause. If O’Rawe is right, then this casts Adams’ statement about Thatcher’s “shameful role” in a rather different light. Note his own reference to “back-channels” in his his statement.
Secondly, I think you’re misreading the Hayek letter just a little given that she explicitly says that the measures used in Chile would be “unacceptable” in Britain because they would conflict with “our traditions and our Constitution” (which, it seems obvious, she is defending). The inference is thus not profoundly “undemocratic” at least in the British context. It would be fairer to say that, as a cold war conservative, Thatcher was perfectly happy to see right-wing dictators employ brutal policies in their own countries (it being none of her business) which she rejected in her own; this was pretty standard stuff for her and Ronnie at the time. Call it the relativism of the Right, if you like.
Thirdly, I don’t think her victories, in purely political terms, have been “exaggerated”. She completely destroyed all her main opponents, reshaped the economy, and imposed a new dominant ideology whilst winning 3 general elections by hefty margins (44, 42, and 42 percent respectively) on highish turnouts. The opposition was indeed fractured but a big portion of that opposition — namely the David Owen wing of the Alliance — preferred Thatcher to Labour. Polling also bore out the fact that most Alliance voters favoured the Tories over Labour. I dare say even many Labour voters had little interest in seeing Michael Foot become Prime Minister.
Lastly, I find the whole “the witch is dead” and “Thatcher was evil” parade to be lamentable. There was a difference between Thatcher and Pinochet or whoever else you care mention. She was a democratically-elected leader who used constitutional methods to impose an admittedly malevolent set of policies. But much of what she did was popular and she had the votes to prove it. Insults and name-calling are a poor substitute for analysis. That approach also ignores the basic left-wing insight that you shouldn’t confuse the medium with the message. Thatcherism and not Thatcher is what should be at issue. That ideology triumphed by making a bold appeal to people’s self-interest and thus decisively upset the traditional moral compass of social democratic politics, which will not recover until someone figures out to swing that compass around.