Peger, I'd agree that HHC is steering the KMT in a surprising direction. Her comments during the campaign and subsequent actions seem to be signifying a New Blue (Deep Blue) direction that seems at odds with my sense of the Taiwanese majority desire for the status quo.
What I mean about the Blues winning the ideological battle was a reference to the more moderate LTH and earlier MYJ views which seemed basically oriented towards preserving Taiwan as culturally and historically Chinese society that kept Mandarin as its national language, saw itself as the modern inheritor of the ROC's older claims, venerated ROC symbolism and saw China as the fountain from which its civilization sprang (I'll call this as Middle Blue as opposed to HHC's New Blue or CKS' Old Blue dream of Reconquest) Which isn't to say that TIW has bought into this completely (the apology to the aboriginals seems to be a de-Sinicizing element). Moreover, I'd agree with your comment that many aspects of the ROC have been "co-opted" to some extent. But the very fact that modern TI now seems to be about preserving ROC sovereignty rather than establishing a true ROT is the Middle Blue ideological victory.
I think TIW is wise not to fight too many ideological or symbolic battles that would burn up her capital, pointlessly worry China and give the KMT hammers to beat her with. But I can imagine that it may be frustrating to some Deep Greens to have a DPP executive legislative and municipal victory but see little tangible difference (it is early still admittedly).