Perhaps it was a mistake to build the dam. However, now that the dam is built, it would be a bigger mistake to tear it down. It is not good environmental policy to restore areas that have been developed.
First, you can never get them back the way they were. Second, the services they provide have to be replaced which just means moving the destruction somewhere else. Third, it costs money better spent somewhere else.

The only time it is worthwhile to restore a developed ecosystem is when it also provides some valuable resource or serves a useful industrial function. For example, in South Florida, it makes sense to restore the Everglades and the Kissimmee River Valley because it provides drinking water for millions of people. It will cost billions, but the alternatives are even more expensive and environmentally destructive. The same goes for mangrove coastal forests, which are worth much more as fishery spawning and flood surge protection than they are as condos for the wealthy. It's not just a question of saving the fuzzy-wuzzies and the wildflowers. Preserving the environment is good business, too.

However, sometimes you have to enlist the Earth Shoe set to make things happen politically. And as you have pointed out, they are sometimes more interested in their favorite outdoor sports than in the welfare of the planet. However, in my own experience in California in the '80s, I did not recall this issue as being driven by the environmentalists, they were opposed to it for the reasons I mentioned above, and the forces behind it were the construction lobby. A multibillion dollar environmental restoration is the sort of thing that the unions, the contractors, and the Corps of Engineers drool over. And it appears that in this latest case, the environmentalists are collaborating with the lobby.

If this outrage ever happens at Hetch Hetchy, it may be easy to blame the fools who have so vocally called for this project as the villains. And it may very well be that they made it possible. But the reason it's happening is not them. As always, follow the money.