"The basic concept of the Reusable Launch Vehicle (RLV) for CATS is still valid and remains untested. The Space Shuttle with its expendable External Tank represented the worst of both worlds between the Expendable Launch Vehicle (ELV) and the RLV. This was recognized almost on the day the Space Shuttle was designed. However the cost caps of the Space Shuttle's development prohibited a true RLV and set the stage for disaster. Developing a true RLV from Saturn V technology would have been like developing a Boeing 747 directly from the Ford Trimotor without all the intermediate government subsidized steps, i.e. the B-29, the F-86 Sabre Jet, the Boeing 707 subdized by the USAF and the C-5 design competition between Boeing and Lockheed. If the Space Shuttle had been a true fully reusable RLV with a robust hot metal thermal protection system then we probably would now have RLV access to LEO at $1000/kg and be well on our way towards colonizing Mars."
All fine and dandy except last sentence: " then we probably would now have RLV access to LEO at $1000/kg and be well on our way towards colonizing Mars."

If this Shuttle would have *actually* flown at 1000/kg, then everyone would be flying them, instead of the reality that everyone is flying ELVs.
Though you could have NASA only flying the Shuttle, it's more likely NASA would have handed it off to private sector and perhaps be developing the next generation or something. In this parallel universe, the ISS wouldn't have flown at 51 inclination and ISS would be a station in which ships could dock and refuel.
But we wouldn't neccessarily be going to Mars nor colonizing it.
The "problem" with the Shuttle at 1000/kg is quite simply the required volume and for it to work out you need lots of activity in LEO. And if NASA had an monopoly on the Shuttle [other than the Soviet Union] you could be worse position than we are currently, unless you think lots a NASA sponsored science experiments in LEO, would be big improvement.
And if the private sector was building and flying these Shuttles there would need even more traffic to LEO- so in this situation we might have in addition several hotels in orbit. And whether NASA had this monopoly or "allowed" the private sector to build and fly the shuttle, NASA the agency would probably be a smaller agency than the one today with a larger percentage of agency would involved in making various space probes. You probably would have had a successful completion of Mars sample mission by now- and probably the whole "faster, cheaper, better" thing would not have happenned- with the good and bad associated with it.

The path to quicker NASA Manned Mars missions would been to keep the Saturn V- and NASA would probably ended up killing lots of crew trying to do it.
And as far colonizing Mars, NASA can't do it, NASA can never make it happen. And if they somehow managed to do it, it would a waste of time and money and lives. The only way Mars can be colonized will involve the private sector doing it.

"Instead the Space Program is currently in the toilet with the Apollo Command Module slated to come back as the CEV with more lunar Flags and Footprints on the horizon. Being in this situation is clear evidence that the Space Shuttle was a disaster for the Space Program."

Can't say that the CEV looks hopeful.
I'm more interested in opening the space frontier than the Space Program. And in this regard, SpaceshipOne is a sign of hope. The Chinese continued and plodding interest in space is hopeful. Sea Launch continuing to operate at apparent profit. Other things I see as hopeful: The Russia's launching the Soyuz from Guiana. The NASA plans to wrap up Shuttle and meet international obligations in regards to ISS. NASA focus on fly spacecraft to study the Moon in more detail. Smart-1 could give some results. A US president who is actually interested in Space program and has put NASA going in to general direction which might get us somewhere. The Prometheus program. Spacex. And in general there seems to be more interest from private sector to be become more involved- but it's still fairly cautious [and for good reasons].