I fully agree. I hated that the "No Compromise, even in the face of armageddon" became "do whatever, so long as you wave a flag" or whatever. It was incredibly sloppy. If you wanted a movement worshipping a dead face of misguided patriotism, the Comedian would have made a far more logical symbol.
The TV show was utterly awful, and I have no idea why it was made, or why it gets any positive ratings whatsoever.
Rorschach absolutely is a nutcase. We, the readers do not want to live his life, the man is literally homeless, and suffers constantly. Yet, suffering for what you believe is heroic, especially when do so out of a desire to provide justice to others. Everyone in this world is deeply flawed, so the one who never stops fighting and is at least nominally on the side of good is certainly the most heroic. He is obviously a flawed man, yet also someone who literally gave up everything trying to fight for what was right when nobody else did.
This gets into a big conflict between western and eastern storytelling. In western storytelling, the protagonist frequently suffers or fails, then learns to change himself, and consequently prevails. In eastern stories, a protagonist more frequently realizes that his path is doomed, and chooses to fight and die anyways. This defeat or death is portrayed as a heroic adherence to ideals over even ones life. Rorschach's path follows this very closely. Both stories are valid, but there is no character that follows the western path and can reasonably be called heroic in this story.