Dear Sechel,
There is a difference between the Litvishe Velt in Israel and the Yeshivishe Velt in America. Here is how it played out on the American side.
In America, the battle lines were almost all about Mitzva Observance. Lubavitch was among the prominent advocates for Torah and Mitzvos, and they had many alliances with the other frum groups and their leaders. By the Eighties the different levels of observance were pretty much set in place and the battle turned more ideological. Because of matters that began in Israel, Chabad found themselves isolated just as the Rebbe became ill. At that point there was so much general confusion, that the haters felt comfortable coming out in public. After the Crown Heights riots, there was very little chance of getting Chabad back into the any of the frum alliances. In the last thirty years communal leadership has suffered greatly. It’s not so much about ideology as that Hashem is in control.